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Valuing Homeownership

  • Khalid Sekkat

    ()

  • Ariane Szafarz

Housing tenure decision combines financial, economic and socio-psychological factors. This paper considers the global premium associated to homeownership. On the one hand, homeownership is associated to private benefits of being a landlord. On the other hand, overinvestment in housing is harmful to diversification and distorts portfolio management. This trade-off, similar to the one associated to corporate private benefits of control, is the cornerstone of our theoretical model. Furthermore, the empirical implementation of the model exhibits a homeownership premium for houses in the Brussels Region reaching at least 9% of the housing price. The findings are robust to several methodological refinements.

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File URL: http://hdl.handle.net/10.1007/s11146-009-9212-0
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Article provided by Springer in its journal The Journal of Real Estate Finance and Economics.

Volume (Year): 43 (2011)
Issue (Month): 4 (November)
Pages: 491-504

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Handle: RePEc:kap:jrefec:v:43:y:2011:i:4:p:491-504
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