Foreclosed American Dream? Parental Foreclosure and Young Adult Children’s Homeownership

This study investigates homeownership decisions of young adult children who experienced parental foreclosure. The results show that they were less likely to become homeowners when parental foreclosure happened. The foreclosures between 2009 and 2011 had the strongest negative effects; yet, young adults appeared to postpone rather than giving up homeownership. The parental foreclosure effects did not seem to operate through neighborhood effects or common economic shocks, but the foreclosure effects exceeded the positive effects of savings, making homeownership less likely among foreclosure witnesses who saved than those who did not. In sum, the delay in young adult children's homeownership reveals a reinforcement effect of a housing market downturn but limited effects on the wealth accumulation of the affected children