First-Time Home Buyers

Residential investment before the mid 1980s was very volatile and since then it has been much less volatile. Before the 1980s mortgage markets were highly regulated and mortgage opportunities were limited, while large numbers of baby-boom households were acquiring their first house. Since 1980 the mortgage market has been deregulated, many new mortgage opportunities became available, and the number of baby-boomers buying their first house began to decline. We examine how regulatory change, mortgage innovation, and life-cycle housing choices contribute to the aggregate residential investment dynamics. Our analysis is based on a life-cycle housing model consistent with evidence on housing choices from the NLSY