Parent Housing Wealth, Credit Constraints, and Homeownership Transitions

In this paper, I examine how family housing wealth affects homeownership transitions during divergent periods of credit access. I use matched parent-child data from the Panel Study of Income Dynamics, and exploit variation across local housing markets, as well as the recent housing cycle, to assess this relationship. I explore how transfers are affected by parent housing values, for different housing market experiences, and for households with renter parents in these same neighborhoods. I find that increases in parent housing values are correlated with an increased likelihood of receiving a transfer, larger transfer amounts, and an increased likelihood of transitioning to homeownership during the housing bust, but not during the housing boom. In contrast, households with renter parents in these same neighborhoods are not differentially affected by local housing market fluctuations during the housing bust. Overall, my findings suggest that family wealth matters more for home purchases when there are barriers to formal channels of mortgage borrowing.