No, rising house prices are not the driver of sharp fertility declines. The evidence shows only modest, mixed effects that cannot explain the large drops observed in places like Canada.

What the Research Actually Shows:

A well-known study by Dettling and Kearney (2014) found that rising house prices have opposing effects: they slightly increase fertility among homeowners (via a “home equity” or wealth effect) and slightly decrease it among renters (via a price effect). At average U.S. homeownership rates, the net effect was a small increase in fertility.

This pattern has held up in other countries. For example, Daysal et al. (2021) and related work confirm similar homeowner/renter dynamics in Denmark and elsewhere.

Clark (2012) found that expensive housing markets are associated with a modest delay in age at first birth (roughly 3–4 years after controls), but the overall impact on completed fertility remains limited.

Canadian evidence aligns with this. Clark and Ferrer (2019) analyzed longitudinal data and found that higher lagged house prices were positively associated with the probability of an additional birth among homeowners in some specifications, but the effects were small and did not drive large-scale declines. They noted that falling school-aged children in high-price cities like Vancouver or Toronto are better explained by selective migration of people with preferences for fewer children into urban centers, rather than existing residents having fewer kids due to prices.

These effects are too modest to explain Canada’s fertility rate of about 1.25–1.3 children per woman (a record low, far below the 2.1 replacement level).

Expensive cities do have fewer children on average, but this largely reflects self-sorting: higher-income, higher-educated people (who tend to have fewer children) cluster in costly urban areas. Correlation is not causation.

Fertility is declining across most developed countries, regardless of housing costs:

– Israel maintains a high fertility rate (~2.9 children per woman, highest in the OECD), despite expensive housing; Tel Aviv is pricier than Montreal.
– Japan has long had very low fertility (~1.2) despite more affordable housing in many areas compared to Canada.

As Richard Florida summarized in “Don’t Blame Expensive Housing for Falling Fertility”: intuition suggests high costs deter families, but demographic research points more strongly to higher education and related lifestyle shifts as drivers of lower birth rates. Richer societies and cities tend to have lower fertility.

Fertility choices are heavily shaped early in life. A 16-year-old planning her future is unlikely to base major decisions on distant future house prices in her 20s or 30s. Models ignoring how teenagers view family, career, and life priorities miss the bigger picture.

Housing costs matter at the margins (with offsetting effects by tenure), but they are not the story behind broad fertility collapses. Policies focused on housing affordability are unlikely to reverse fertility trends.

We have no reason whatsoever to believe that a collapse in housing prices in a country like Canada would drive fertility upward. It is motivated reasoning.

High house prices are a terrible thing in my opinion. Investing all your capital in houses is an odd way to get prosperity. But it does not drive our fertility collapse.

References

Clark, Jeremy. 2012. “Do Women Delay Family Formation in Expensive Housing Markets?” Demographic Research 27(1): 1–24. https://doi.org/10.4054/DemRes.2012.27.1

Clark, Jeremy, and Ana Ferrer. 2019. “The Effect of House Prices on Fertility: Evidence from Canada.” Economics: The Open-Access, Open-Assessment E-Journal 13(2019-38): 1–32. https://doi.org/10.5018/economics-ejournal.ja.2019-38

Daysal, N. Meltem, Michael F. Lovenheim, Nikolaj Siersbæk, and David N. Wasser. 2021. “Home Prices, Fertility, and Early-Life Health Outcomes.” Journal of Public Economics 198: 104366. https://doi.org/10.1016/j.jpubeco.2021.104366

Dettling, Lisa J., and Melissa S. Kearney. 2014. “House Prices and Birth Rates: The Impact of the Real Estate Market on the Decision to Have a Baby.” Journal of Public Economics 110: 82–100. https://doi.org/10.1016/j.jpubeco.2013.09.009 (NBER Working Paper 17485, 2011/2014 version)

Florida, Richard. 2018. “Don’t Blame Expensive Housing for Falling Fertility.” CityLab (Bloomberg), June 14, 2018. https://www.bloomberg.com/news/articles/2018-06-14/the-complex-relationship-between-house-prices-and-fertility