As housing prices rise, non-owners (e.g. renters) tend to have fewer kids. A new study found that for every $10,000 rise in house prices, the fertility rate of non-owners subsequently drops by 2.4 percent on average, in urban areas throughout the U.S. (Now I have an excuse the next time my parents make insinuations about “grandkids.”)
Perhaps unexpectedly, though, the opposite was seen with homeowners, whose fertility goes up with home prices. For every $10,000 increase in housing prices from 1997 to 2006, owners’ fertility rates rose on average 5 percent. This is partially explained by the rising equity of the home; though home equity is basically illiquid, one can extract equity from it via loans, like a second mortgage, to help pay for raising a child, the authors write.
The study suggests that “house prices are a relevant factor in a couple’s decision to have a baby,” which is relatively intuitive, but doesn’t appear to have been shown this clearly before. While much more research has examined the link between employment rate and fertility, this research shows there is an even stronger correlation between housing prices and fertility.
“Rising home values have a negative impact on [non-owner’s] birth rates because they represent, on average, the largest component of the cost of raising a child: larger than food, child care, or education,” writes Laurent Belsie at the National Bureau of Economic Research. The study was published this month in the Journal of Public Economics.