Do homeowners achieve more household wealth in the long run?

Despite the public’s faith in homeownership as a vehicle for wealth creation, there are surprisingly few empirical studies of the independent impact of homeownership and its duration on household wealth accumulation. This paper provides the first empirical evidence that homeownership, after controlling for other drivers of wealth accumulation, is positively and significantly associated with wealth accumulation over time. Using the Panel Survey of Income Dynamics, it examines the influence of housing tenure choices between 1989 and 2001 on household net wealth levels in 2001 after controlling for initial wealth in 1989, location, income, education, and other family and personal characteristics that might influence the rate of wealth accumulation. Importantly, the models used also control for the tendency of households to accumulate wealth between 1984 and 1989 (five years prior to the studied period). This approach is used to address the possibility that an unobserved variable—the propensity to save or accumulate wealth—may be associated with both the probability and duration of homeownership and the rate of wealth accumulation. All else equal, those who owned homes and owned for longer periods of time had significantly higher household net wealth by 2001. These results are compelling because house price appreciation over the period was near its long-run average while stock gains were above and real rent increases below their long-run averages. Hence, the findings are suggestive of a positive influence of ownership over long periods on net wealth, even during a period when alternative investments produced higher than normal returns and rents grew slowly. This is especially important because the overwhelmingly majority of households do not sell their homes shortly after buying them. In our sample, those who became owners typically owned for 7 years. Furthermore, most households that bought during a period of declining real home values in the early 1990s continued to own their homes for at least eight years and came out well ahead of those who did not own.     

住房自有率与城市蔓延：理论与实证

通过构建一个包含住房租赁市场的封闭、单中心城市一般均衡模型，模型化了住房自有率与城市蔓延之间的关系，理论模型结论显示：首先，与自有住房者相比，租房者倾向于居住在离市中心较近的地方；其次，住房自有率的提高会使城市空间面积扩大，加剧城市蔓延。进一步，利用地级市数据分别对理论命题结论进行了检验，在比较充分地控制内生性问题后，实证结果证实了高住房自有率会加剧城市蔓延。因此，长期以来我国不断升高的住房自有率也是加剧我国城市蔓延的重要原因。     

Was the expansion of housing credit in Japan good or bad?

This paper shows, using data from the Family Income and Expenditure Survey, that housing credit has become increasingly available over time in Japan, especially since 2000, and that this has made it easier for Japanese households to purchase housing and enabled them to do so at an earlier age. However, it also shows that the greater availability of housing credit has increased households’ housing loan repayment burden, which has resulted in their cutting back on their other consumption expenditures and created the potential for retirement insecurity. Another concern is that the increasing availability of housing credit has been accompanied by a pronounced shift from fixed-rate to variable-rate housing loans. This is cause for concern given the low level of financial literacy that prevails among the Japanese population and the likelihood that interest rates on variable-rate housing loans will be raised sooner or later as monetary policy is tightened.     

Skill-biased technological change and homeownership

In the United States, the residential housing market went through important changes over the period from the 1970s to the mid-1990s. Although the aggregate homeownership rate was relatively stable during that period, the distribution of homeownership rates by age changed in remarkable ways. While younger households saw substantial declines in homeownership rates, the opposite happened for older households. In this paper, we argue that the skill-biased technological change (SBTC) that began during the 1970s has been an important factor behind the observed change in the distribution of homeownership rates by age. We build a life cycle model in which skills are accumulated on-the-job through experience: learning by doing. Early in life, households have lower levels of skills and therefore lower earnings. SBTC increases the returns to skill, widening the wage gap between young and old ages. As a consequence, it takes more time for young households to become homeowners given frictions in financial markets (e.g. downpayment requirements) and housing markets (e.g. large and indivisible houses), in line with consumption smoothing behavior. On the other hand, older households that could not afford a house before may now become homeowners, given higher returns to skill. Our analysis confirms this conjecture, namely, that SBTC shifts the distribution of homeownership from the young to the old.     

Adaptation investments and homeownership

This article develops a model where ownership improves the efficiency of the housing market as it enhances the utility of housing consumption for some consumers. The model is based on an extended Hotelling–Lancaster utility approach in which the ideal variant of housing is obtainable only by adapting the home through a supplementary investment. Ownership offers low costs of adaptation, but has high contract costs compared with renting. Consumers simultaneously choose housing demand and tenure, and because of the different cost structure only consumers with strong preferences for individual adaptation of the home choose ownership. This article analyses the consumer’s optimization. The model provides an explanation for the observation that homeowners typically live in larger dwelling units than tenants. It also provides an explanation for a high price of housing services tending to reduce homeownership rates.     

住房增加幸福：是投资属性还是居住属性？

本文利用中国家庭金融调查2011年的调查数据就城镇居民自有住房与个体主观幸福感的关系进行了实证研究。我们发现,房屋的资产属性(房屋产权、预期房屋价格变化和实际房屋价格变化趋势)对居民主观幸福的影响在10%的显著性水平下不显著,住房的财富效应未被发现。但是,我们的实证结果显示房屋的居住属性(房屋房间数目、房屋人均使用面积和房屋已使用时间等)均对居民主观幸福感有显著的正向影响。但是,对拥有多套房屋的家庭来说,第二套及以上房屋拥有对于他们的主观幸福感的提升既非源于房屋居住属性,也非资产属性。最后,对同为本地区的户籍居民且租房的家庭而言,是否拥有自有产权房屋对其幸福感的影响并不显著。     

Measuring the external benefits of homeownership

The subsidization of homeownership is justified on efficiency grounds only to the extent that it provides benefits to people other than the homeowner. We use the clustered neighborhoods subsample in the American Housing Survey to measure that benefit in the form of higher housing prices in neighborhoods with higher ownership rates (and lower vacancies). We attempt to account for unobservable neighborhood and house attributes that may be correlated with occupancy and ownership through instrumental variables, switching regressions and panel methods. Estimates indicate that a housing transition from renting to owning creates approximately $1300 in measured benefits.     

Renting vs buying a home: A matter of wealth accumulation or of geographic stability?

I study the housing tenure decision in the context of a spatial life cycle model with uninsurable individual income risk, plausibly calibrated to match key features of the US housing market. I find that the relatively low ownership rate of young households is mainly explained by their high geographic mobility. Downpayment constraints have minor quantitative implications on ownership rates, except for old households. I also find that idiosyncratic earnings uncertainty has a significant impact on homeownership rates. Based on these results, I argue that the long term increase in ownership rates observed over the period 1993–2009 was not necessarily due to mortgage market innovations and the relaxation of downpayment requirements, as is often argued. Instead, it was simply an implication of US demographic evolution, most notably the decline in interstate migration and, less importantly, population ageing. The model predicts that an increase in the income risk (i.e. higher income inequality) has a positive impact on geographical mobility of young households, which means that young homeowners are less affected by the labour market inefficiency associated with homeownership.     

Homeownership and the scarcity of rentals

The provision of owner-occupied versus rental houses is modeled as a competitive search economy where households have private information over their expected duration. With public information, households with low vacancy hazard rates pay lower rents and search in thicker rental markets. With private information, rentals are under-provided to long-duration households to discourage short-duration households from searching there. Ownership is attractive in part because it cures the private information problem. Using a novel data set of rental listings, we show that homeownership rates are high where rent-to-price ratios are low but rentals are scarce and that long-duration households sort into scarce rental markets. These patterns are consistent with the model only under private information.     

Measuring the consequences of promoting inner city homeownership

This paper examines low- and moderate-income households in the City of Philadelphia who are becoming homeowners for the first time. We examine two Nehemiah developments subsidized by the City of Philadelphia that offer newly constructed homes at well-below cost. This paper uses a unique survey of these new owners to measure what Nehemiah residents gain in terms of structure and community attributes as they make the transition from renting to owning. The new owners in the Nehemiah complexes significantly improve their housing structures while raising their exposure to crime and weak local public schools. As part of the City’s community development strategy, these developments were expected to increase economic activity near these sites. We document that there is no evidence of local benefit spillovers for census tracts where the Nehemiah developments were built. Our survey results suggest that the new housing developments represent an “oasis” where there are few interactions between the new homeowners and the incumbent residents of the greater community.