TY - JOUR AU - Banks, James AU - Blundell, Richard AU - Oldfield, Zoë AU - Smith, James P TI - Housing Price Volatility and Downsizing in Later Life JF - National Bureau of Economic Research Working Paper Series VL - No. 13496 PY - 2007 Y2 - October 2007 DO - 10.3386/w13496 UR - http://www.nber.org/papers/w13496 L1 - http://www.nber.org/papers/w13496.pdf N1 - Author contact info: James Banks Arthur Lewis Building-3.020 School of Social Sciences The University of Manchester Manchester M13 9PL United Kingdom E-Mail: j.banks@ifs.org.uk Richard Blundell University College London Department of Economics Gower Street London England E-Mail: r.blundell@ucl.ac.uk Zoë Oldfield Institute for Fiscal Studies 7 Ridgemount London, WC1 7AE U.K. E-Mail: zoe_o@ifs.org.uk James P. Smith RAND Corporation 1776 Main Street P.O. Box 2138 Santa Monica, CA 90407-2138 Tel: 310-451-6925 E-Mail: jsmith_1776@outlook.com M1 - published as James Banks, Richard Blundell, Zoë Oldfield, James P. Smith. "Housing Price Volatility and Downsizing in Later Life," in David A. Wise, editor, "Research Findings in the Economics of Aging" University of Chicago Press (2010) M3 - presented at "Economics of Aging", May 11 - December 0, 2007 AB - In this paper, we modeled several types of housing transitions of the elderly in two countries -- Britain and the United States. One important form of these transitions involves downsizing of housing consumption, the importance of which among older households is still debated. This downsizing takes multiple forms, including reductions in the number of rooms per dwelling and the value of the home. There is also evidence that this downsizing is greater when house price volatility is greater and that American households try to escape housing price volatility by moving to places that are experience significantly less housing price volatility. Our comparative evidence in suggests that there is less evidence of downsizing in Britain. Our results indicate that housing consumption appears to decline with age in the US, even after controlling for the other demographic and work transitions associated with age that would normally produce such a decline. No such fall in housing consumption is found in Britain, largely because British households are much more likely to stay in their original residence. ER -