Homeowner Subsidies and Suburban Living: Empirical Evidence from a Subsidy Repeal

To show how homeownership subsidies influence the distribution of population across space, I exploit the 2005 repeal of a lump-sum real estate purchase subsidy in Germany. Using administrative data on population in local labor markets and IV-estimations in difference-in-differences and triple differences frameworks, I find that repealing subsidies to homeownership recentralizes regions. The effect is likely driven by families with children and young residents of »building-age« who no longer become homeowners in the periphery. These results help inform our understanding of the spatial impacts of subsidizing homeownership.