Analysis of Financing for Young Generation Homebuyers during Panic Buying Period

This paper analyzes the financing of home buying by young adult households aged 20‒39 during the panic buying period. Although the discourses of ‘soul-scraping’ and ‘parental support’ were popular in the media, there is a lack of rigorous proofs of panic buying. This paper focuses on financing as a factor that converts irrational exuberance called ‘panic’ into actual market purchases called ‘buying’. According to the analysis, household loans and wealth transfers were significant means of financing of the home buying for young generations during the panic buying period. In case of controlling other factors, borrowing from banks or transfers from parents was more important than accumulating own funds for young households to carry out panic buying. In case of comparing the financing composition of the metropolitan area with others, the impact of household loans decreased in the metropolitan area. This suggests that lending regulations concentrated in the metropolitan area may be effective in curbing panic buying. Finally, the impact of wealth transfer was stronger for households that expect house prices to rise than for those who do not. This implies that wealth transfer from parents was stronger than other financing ways in the panic buying process. The analysis of the metropolitan area suggests the effectiveness of lending restrictions, though, the price forecast emphasizes wealth transfer as the financing of panic buying. Since home buying based on the forecast of upward price is more likely to be panic buying than home buying in the metropolitan area, policy responses should be expanded from existing lending regulations to wealth transfer.