Study: If You Want More Babies, Make Mortgages Affordable For Young People
A new NBER working paper (Did the Modern Mortgage Set the Stage for the U.S. Baby Boom? by Lisa J. Dettling & Melissa Schettini Kearney) reveals an unexpected (well, actually expected) catalyst behind America’s famous baby boom: government-backed mortgages that transformed homeownership and family formation patterns.
Why it matters: The FHA and VA mortgage programs impacted more than homeownership – they helped reshape American families at a time when orthodox economic theory suggested birth rates should have been falling, not booming.
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Birth rates rose 50% between 1935-1960
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Young adult homeownership jumped from 20% to 50% (1940-1960)
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FHA/VA loans led to approximately 3 million additional births
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Every 1,000 mortgages resulted in about 309 more births
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These loans accounted for ~10% of “excess” baby boom births
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By the early 1950s, FHA/VA loans represented:
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45% of all outstanding mortgages
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60% of new mortgage debt
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