June 8, 2026
Divorce and The Housing Market
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Marketplace interviewed me in for this response to a reader’s question, Can Divorce Affect The Housing Market? The story reads,
How much does divorce affect the economy, especially housing prices? In Davis, California, where I live, at least four households on my block have kids who effectively have a second house somewhere else in town with their other parent.
We know the effects divorce can have on household finances — it can lead to a decline in income, especially for women. One study from researchers at the University of Michigan and Boston University found that women increased “their labor in the workforce” following a divorce. But when it comes to the housing market, there’s little economic research on this topic.
The evidence we do have indicates that divorce can lead to a decline in homeownership rates, said Anthony Orlando, an associate professor of finance, real estate and law at California State Polytechnic University, Pomona, pointing to one Denmark study from 2019 that used a model to predict the correlation between the two.
“When there’s a divorce, there’s usually a sharp drop in wealth or net worth, because they’re splitting assets and there are costs associated with the divorce, paying for lawyers, etc. and all those things tend to reduce homeownership,” Orlando said. “If you’re only relying on your income rather than also having somebody else’s, you’re less diversified, and you might have more difficulty making the mortgage payments.”
Orlando said he hasn’t seen good studies on how divorce affects housing prices, but if there’s a decline in homeownership demand, then prices could decline.
The inverse is also true – the state of the housing market affects divorce.
“If housing prices increase significantly, there’s some evidence suggesting that divorce rates among homeowners actually goes down, and the reason is because when housing prices increase, there’s less financial stress. The married couple now has a house that’s worth more money,” Orlando said.
Rising rental prices could also make couples more hesitant to take the leap toward divorce. When housing prices go up, so do prices in the rental market. If someone is considering dissolving their marriage and sees high apartment prices, they might decide it doesn’t make financial sense to divorce, Orlando said.
There’s also a correlation between the broader economy and divorce.
“When the economy is hot, people divorce at higher rates, and when the economy is weak, it’s in recession, they divorce at lower rates,” said David Reiss, a law professor at Cornell University who studies housing policy.
Their mortgage may be underwater and they could be financially strapped, making the prospect of divorce difficult, Reiss said.
“Most of us in our day-to-day lives think to ourselves that questions of love and hate and relationships are driven by us as people,” Reiss said. But when you take a 10,000-foot view, you see how much the economy can drive our decisions, Reiss said.
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