After years of being relatively constant, the homeownership ratea
target for housing policy- has increased since 1995. This paper attempts
to understand why the homeownership rate has been increasing
by constructing a quantitative model and then using this model to evaluate
explanations that have been offered to account for this increase.
We find that the increase in the homeownership can be explained by
innovations in the mortgage market that allows households to take a
positive housing investment position with a much smaller downpayment.
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