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The dynamics of homeownership among the 50+ in Europe

Abstract

We use life history data covering households in 13 European countries to analyse residential moves past the age of 50. We observe four types of moves: renting to owning, owning to renting, trading up or trading down for homeowners. We find that in the younger group (aged 50–64), trading up and purchase decisions prevail; in the older group (65+), trading down and selling are more common. Overall, moves are rare, particularly in countries characterised by high transaction costs. Most moves are driven by changes in household composition (divorce, widowhood, nest leaving by children), but economic factors play a role: low-income households who are house-rich and cash-poor are more likely to sell their home late in life.

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Notes

  1. For instance, Attanasio et al. (2011) leave the housing tenure choice past the age of 60 unexplained, for lack of a plausible economic rationale of the widespread homeownership in old age.

  2. Unfortunately, we do not know the number of rooms of each accommodation, only of the current one; so, we cannot say whether financial downsizing is accompanied by a reduction in living space. Also, we do not observe spending on housing maintenance and repairs; given that the elderly often draw down their housing equity by cutting on maintenance, we fail to capture this type of housing wealth decumulation in old age.

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Acknowledgments

We thank two referees for their extremely useful comments and suggestions. We are also grateful for comments made by the audiences at the Labour Economics Workshop, Brixen, May 2011; the Bank of Italy-Dondena Workshop on Public Policies, Social Dynamics and Population, July 2011; and the European University Institute, October 2011. This paper uses data from SHARELIFE release 1, as of November 24, 2010 or SHARE release 2.4.0, as of March 17, 2011. The SHARE data collection has been primarily funded by the European Commission through the 5th Framework Programme (project QLK6-CT-2001-00360 in the thematic programme Quality of Life), through the 6th Framework Programme (projects SHARE-I3, RII-CT-2006-062193, COMPARE, CIT5-CT-2005-028857, and SHARELIFE, CIT4-CT-2006-028812) and through the 7th Framework Programme (SHARE-PREP, 211909 and SHARE-LEAP, 227822). Additional funding from the US National Institute on Aging (U01 AG09740-13S2, P01 AG005842, P01 AG08291, P30 AG12815, Y1-AG-4553-01 and OGHA 04-064, IAG BSR06-11, R21 AG025169) as well as from various national sources is gratefully acknowledged (see www.share-project.org for a full list of funding institutions).

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Correspondence to Guglielmo Weber.

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Responsible editor: Alessandro Cigno

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Angelini, V., Brugiavini, A. & Weber, G. The dynamics of homeownership among the 50+ in Europe. J Popul Econ 27, 797–823 (2014). https://doi.org/10.1007/s00148-013-0477-5

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  • DOI: https://doi.org/10.1007/s00148-013-0477-5

Keywords

  • Housing
  • Life cycle
  • Ageing
  • SHARELIFE

JEL Classifications

  • D91
  • E21
  • J14