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Elderly Homeownership Transitions

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  • Gary Painter
  • KwanOk Lee

Abstract

Understanding the housing choices of the older households will grow in importance as the baby boom generation starts to retire. This proposed analysis utilizes a rich longitudinal data set (PSID) to provide insight into the reasons that older households leave homeownership to become renters. Because of the richness of the data, this analysis is able to control for life transitions, a household’s income and wealth, and connection to one’s children in predicting when a homeowner will become a renter. The results have important implications for the life cycle hypotheses and the relationship between bequest motivated savings and housing tenure choice. We find that age is not related directly to housing tenure choice for older households. Instead, having lower health status and being a single head of household is an important predictor of housing tenure transitions. At the same time, very few life changing events immediately lead a homeowner to become a renter. Finally, living next to one’s children lowers the probability of becoming a renter, and having richer children increases the probability of becoming renter and therefore consuming one’s housing wealth.

Suggested Citation

  • Gary Painter & KwanOk Lee, 2008. "Elderly Homeownership Transitions," Working Paper 8534, USC Lusk Center for Real Estate.
    • Handle: RePEc:luk:wpaper:8534
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    File URL: http://lusk.usc.edu/sites/default/files/working_papers/wp_2008-1002.pdf
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