Thursday, June 23, 2011
The Link Between House Prices and Divorce
June 23, 2011
Declining house prices make it less likely that a homeowner will get divorced but more likely that a renter’s marriage will end, a new study finds—probably because a drop in equity traps unhappy couples in their house, while renters can find two affordable apartments.
There’s been anecdotal discussion of the effect of the housing bust on divorces—the authors of the new study cite this post, from WSJ.com’s The Juggle—but the article represents a first cut at studying the issue empirically.
Lacking long-term data including both demographics and housing prices, the researchers combined two data sets: the Bureau of Census’s Current Population Survey, from 1991 to 2010, and Federal Housing Finance Agency figures for house prices in more than 150 metropolitan areas.
The researchers used educational status as a proxy for renters and homeowners (since many more college grads than high-school dropouts are homeowners: 80% versus 58%). The focus was on people ages 25 to 79 who had ever been married. Looking at high-school dropouts, over the full period, the proportion who were divorced was 14.6%. That figure would rise to 17.58% if housing prices dropped 10%, the researchers calculated, after looking at historical patterns.
Read the Paper
Posted by Yulie Foka at 9:00 PM