Keeping up with the Joneses: Lifestyle Competition and Housing Consumption in the Era of the Housing Price Bubble, 1999-2007

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Abstract
Sociologists conceptualize lifestyles as structured hierarchically where people seek to emulate those higher up. Growing income inequality in the U.S. means those at the top bid up the price of valued goods like housing and access to good schools, and those in lower groups have struggled to maintain their relative positions. We examine this process in the context of the U.S. housing market from 1999-2007 using the Panel Study of Income Dynamics. Houses are the ultimate status symbol. Their size, quality, and location signal to others that one has (or has not) arrived. We conduct an analysis of residential moves. As house prices rose, high income households were mostly likely to buy a home and to report upgrading and relocating to more desirable zip codes and large homes. Low income households were frequently restricted to the rental market and most likely to be compelled to downgrade. Across the income distribution, upgrades in terms of home size and zip code desirability came at a significant cost in terms of increased housing expenditures and housing debt relative to income. Households who had children were particularly willing to take on these increases. This evidence suggests that growing inequality meant a struggle to maintain lifestyles during the housing bubble, in particular for the bottom half of the income distribution.

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