This paper examines the responsiveness of renters' decisions to save f
or home purchase to house prices. I use membership in a tax-deferred s
avings program for prospective first-time home buyers in Canada to ide
ntify renter households who are saving for a down payment. I find that
high house prices substantially reduce the probability of households
saving for a down payment: a $4000 increase in house prices decreases
the probability of saving for a down payment by one percentage point.
In addition, households saving for home purchase have $300 less in acc
umulated assets for every $1000 higher increment to house prices. (C)
1994 Academic Press, Inc.