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American Economic Journal: Economic Policy: Vol. 5 No. 2 (May 2013)

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How Do Mortgage Subsidies Affect Home Ownership? Evidence from the Mid-Century GI Bills

Article Citation

Fetter, Daniel K. 2013. "How Do Mortgage Subsidies Affect Home Ownership? Evidence from the Mid-Century GI Bills." American Economic Journal: Economic Policy, 5(2): 111-47.

DOI: 10.1257/pol.5.2.111

Abstract

The largest twentieth-century increase in US home ownership occurred between 1940 and 1960, associated largely with declining age at first ownership. I shed light on the contribution of coincident government mortgage market interventions by examining home loan benefits granted under the World War II and Korean War GI Bills. Veterans' benefits increased home ownership rates primarily by shifting purchase earlier in life, explaining 7.4 percent of the overall 1940-1960 increase, and 25 percent of the increase for affected cohorts. A rough extrapolation suggests that broader changes in mortgage terms can explain 40 percent of the 1940-1960 increase. (JEL G21, N22, N92, R21, R31)

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Authors

Fetter, Daniel K. (Wellesley College)

JEL Classifications

G21: Banks; Depository Institutions; Micro Finance Institutions; Mortgages
N22: Economic History: Financial Markets and Institutions: U.S.; Canada: 1913-
N92: Regional and Urban History: U.S.; Canada: 1913-
R21: Urban, Rural, Regional, Real Estate, and Transportation Economics: Housing Demand
R31: Housing Supply and Markets

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