Making sense of the housing market and fertility

Family formation has long been one of my key interests, both because it influences politics and because it important on its own. Much of my own research touches on the subject. I must admit, however, that I often have trouble making sense of how developments in the housing market influence decisions about marriage and parenthood. On its face, the relationship seems like it would be straightforward: making it easier to own a decent home should have a positive impact on marriage rates and fertility. The story is a bit more complicated than that, however. I've been putting in some time lately getting acquainted with the best research on the subject.

The intuitive part of the question: Family formation is typically associated with several other changes in how people live. Most notably, we tend to associate starting a family with owning a home. Growing families simply require more space. Amenities like yards suddenly have greater importance once children begin to arrive. Thus, we should not be surprised that we see a correlation between the housing market and family patterns – though, as is so often the case in questions like this, discerning the precise relationship is not necessarily easy.

Although much scholarship has focused on the economic determinants of marriage patterns and fertility, the availability and affordability of housing is an important predictor of marriage that has received relatively little attention from popular media – though this subject has been examined by a number of scholars. The idea that home affordability will influence marital and fertility patterns is not new. In fact, Benjamin Franklin discussed this issue in 1755. He argued that availability of abundant land was the reason colonial America was experiencing such explosive population growth:

Land being thus plenty in America, and so cheap as that a labouring man that understands Husbandry, can in a short time save money enough to purchase a piece of new Land sufficient for a plantation, whereon he may subsist a family; such are not afraid to marry ; for if they even look far enough forward to consider how their children when grown up are to be provided for, they see that more Land is to be had at rates equally easy, all circumstances considered.[i]

Since that time, abundant scholarship has reaffirmed that the ease with which one may attain a home plays an important role in the decision to start a family. In 1937, Willystine Goodsell discerned a relationship between the spaciousness of dwelling units and the national birthrate.[ii] In his 1965 attempt to explain the rising average marriage age in Europe, John Hajnal pointed to the decreasing amount of land available for housing.[iii] A great deal of recent scholarship has further affirmed the relationship between housing and marriage and fertility, though much of this research was conducted outside of the United States.

A study of fertility patterns in Sweden since the 1970s indicates that larger dwellings were positively associated with fertility.[iv] A study from Italy further indicated a positive relationship between fertility intentions and housing security.[v] An examination of census data from the United States from 1940 until 2000 found that there is a negative relationship between the cost of living space and fertility.[vi] Other work shows a relationship between residential roominess and childbearing.[vii]

But examining these questions from an empirical standpoint raises several concerns. When considering the relationship between home ownership and fertility, it is important to be sure that we are not confusing cause with effect. That is, while it is clear that fertility is higher among couples living in single-family homes than among those living in apartments,[viii] we should be careful about inferring that owning a home causes higher fertility. It is just as likely that people move out of apartments and into their own homes specifically because they wish to grow their families. Indeed, Kulu and Vikat found that fertility variation across housing types is largely due to selective moves.[ix] Withers, Clark, and Ruiz reached similar conclusions in their study of this subject.[x] That being said, if fertility and home ownership are related, the ability to afford a home once a couple is ready to have children will certainly play a role in fertility decisions.

In her study of the economic determinants of marriage, Mary Elizabeth Hughes found that local labor and housing conditions influenced whether young people pursued marriage or some other kind of domestic arrangement.[xi] She specifically found that marriage becomes more likely when earnings are high and housing costs are low. In a study of American cities, Simon and Tamura found that the price of living space influences fertility decisions – higher costs were associated with lower fertility.[xii]

Dettling and Kearney found that the relationship is slightly more complicated than this, however. While rising home prices tend to discourage fertility among couples that do not presently own a home – or that own a home that is too small to handle an additional child – rising home prices increase the home equity of current home owners, which has a positive effect on their fertility.[xiii] Lovenheim and Mumford similarly found that an increase in housing wealth leads to an increase in fertility among home owners.[xiv]

It makes intuitive sense that the housing market will influence decisions about marriage and fertility, but the empirical evidence for this relationship is not always consistent – especially if we look abroad. While there is clearly as association between home ownership and family formation, the cost of home ownership is also often very high; this may explain why the countries in Western Europe with some of the highest rates of home ownership also have lower fertility rates.[xv] Further, in some countries, such as the United Kingdom, home owners have fewer children than renters, and tend to have them later in life.[xvi] Finally, the rapid decline of fertility in Europe also coincided temporally with a significant increase in homeownership; while it is difficult to argue that higher rates of ownership caused lower fertility, this coincidence does weaken the argument that widespread homeownership is a panacea to low birthrates.

Although the relationship between home ownership and marriage and fertility is not necessarily consistent in all places, there are certain housing market characteristics that are generally associated with very low fertility. Specifically, according to Clara Mulder and Francesco C. Billari, family formation is particularly difficult in what they call the “difficult home-ownership regime.”[xvii] In this regime, home ownership rates are actually rather high, but mortgages are not easily available, thus would-be homeowners must rely on their own savings or assistance from family. In countries where this is the norm (Spain, Greece, Italy), young people live with their parents for a longer period of time, and the age at which women become mothers is, on average, very high, and overall fertility is low.

The association between home ownership and parenthood remains part of our culture. Thus, promotion of home ownership, on its face, appears to be a family-friendly policy. However, it is important to be aware of the unintended consequences of such policies. If buying a home proves to be a massive financial burden, forcing a couple to forgo other kinds of consumption, then home-ownership promotion may actually be a family unfriendly policy. Further, we have already seen in the United States how cheap credit designed to foster higher rates of ownership can lead to a bubble and crash.

When looking at home ownership as a means to increase fertility, it is critical to keep the focus on home affordability. Putting people into homes they cannot afford, or could only afford it at the cost of other great sacrifices, will not increase the birthrate. On the other hand, there is evidence that access to affordable housing does have a positive impact on fertility. A study on fertility in the Czech Republic provides compelling evidence for this hypothesis. [xviii] A study focused on the United States indicated that rising housing costs are a key explanation for higher rates of employment among women with small children.[xix]

While debates continue, the preponderance of evidence indicates that home affordability is an important determinant of family formation trends. The degree to which the best jobs are found in cities with astronomical housing costs should therefore be a source of concern to those who desire higher marriage and fertility rates. Caution should be exercised when pushing policies designed to get people in their own homes, as government efforts to tinker with the housing market do not always work out as intended. Nonetheless, recognizing this relationship is an important first step if we wish to encourage earlier marriages and larger families.

[i] Franklin, B. (1750).” Observations concerning the increase of mankind, peopling of countries, etc.” The Papers of Benjamin Franklin, 4, 225-32.

[ii] Willystine Goodsell, “Housing and the Birth Rate in Sweden.” American Sociological Review. 2(1937): 850-65.

[iii] John Hajnal. 1965. “European Marriage Patterns in Perspective.” In Population and History: Essays on Historical Geography. Eds. D.V. Glass and D.E.C. Eversley, 101-143. London: Arnold.

[iv] Sara Ström. 2010. “Housing and first births in Sweden, 1972–2005." Housing Studies 25(4): 509-526.

[v] Daniele Vignoli , Francesca Rinesi, and Eleonora Mussino. 2013. "A home to plan the first child? Fertility intentions and housing conditions in Italy." Population, Space and Place 19(1): 60-71.

[vi] Curtis J. Simon and Robert Tamura. 2009. "Do Higher Rents Discourage Fertility? Evidence from US cities, 1940–2000." Regional Science and Urban Economics 39(1): 33-42.

[vii] Nathanael Lauster. 2010. "A Room to Grow: The Residential Density-Dependence of Childbearing in Europe and the United States." Canadian Studies in Population 37(4): 475-496.

[viii] Marcus Felson and Mauricio Solaun. 1975. “The Fertility-Inhibiting Effect of Crowded Apartment Living in a Tight Housing Market.” The American Journal of Sociology. 80(6): 1410-1427.

[ix] Kulu, Hill, & Andres Vikat. 2008. “Fertility differences by housing type: an effect of housing conditions or of selective moves.” Demographic Research, 17(26), 775-802.

[x] Suzanne Davies Withers, William A.V. Clark, and Tricia Ruiz. 2008. “Demographic Variation in Housing Cost Adjustment with U.S. Family Migration.” Population, Space and Place. 14(4): 305-325.

[xi] Mary Elizabeth Hughes. 2003. “Home Economics: Metropolitan Labor and Housing Markets and Domestic Arrangements in Young Adulthood.” Social Forces. 81(4): 1399-1429.

[xii] Curtis J. Simon and Robert Tamura. 2009. “Do Higher Rents Discourage Fertility? Evidence from U.S. Cities, 1940-2000.” Regional Science and Urban Economics. 39(1): 33-42.

[xiii] Lisa J. Dettling and Melissa S. Kearney. 2014. “House Prices and Birth Rates: The Impact of the Real Estate Market on the Decision to have a Baby.” Journal of Public Economics. 110: 82-100.

[xiv] Michael F. Lovenheim and Kevin J. Mumford, “Do Family Wealth Shocks Affect Fertility Choices? Evidence from the Housing Market,” The Review of Economics and Statistics 95(2013): 464-475

[xv] Clara H. Mulder, "Home-ownership and family formation." Journal of Housing and the Built Environment 21(2006): 281-298.

[xvi] Catherine Hakim. 2003. Models of the Family in Modern Society: Ideals and Realities. Ashgate.

[xvii] Clara H. Mulder and Francesco C. Billari. 2010. "Homeownership Regimes and Low Fertility." Housing Studies 25(4): 527-541.

[xviii] Tomáš Kostelecký and Jana Vobecká. 2009. "Housing Affordability in Czech Regions and Demographic Behaviour–Does Housing Affordability Impact Fertility?." Sociologický časopis/Czech Sociological Review 06: 1191-1213.

[xix] Mark Evan Edwards. 2001. “Home Ownership, Affordability, and Mothers' Changing Work and Family Roles.” Social Science Quarterly. 82(2): 369-383