House prices and home owner saving behavior

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150 Scopus citations


This paper examines the empirical link between house price appreciation and the savings behavior of home owners during the 1980s. The analysis uses household asset and debt data for a sample of under age 65 home-owning households from the 1984 and 1989 waves of the PSID to construct changes in real household wealth as a measure of household saving behavior. Cross-time and cross-regional variation in housing market conditions are used to identify behavioral savings effects. The empirical analysis suggests that the estimated marginal propensity to consume out of real housing capital gains is 0.03 for the median saver household. However, there is an asymmetry in the saving response to both total and unanticipated real housing capital gains. All the savings offset comes from households that experience real housing capital losses. Households that experience real gains do not change their saving behavior. The existence of this asymmetry casts doubt on the power of changes in house prices to explain the time-series path of saving in the United States.

Original languageEnglish (US)
Pages (from-to)313-336
Number of pages24
JournalRegional Science and Urban Economics
Issue number3-4
StatePublished - Jun 1996
Externally publishedYes


  • House prices
  • Saving behavior

ASJC Scopus subject areas

  • Economics and Econometrics
  • Urban Studies


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