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An Approach for Housing Wealth Estimation: The Mexican Case

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  • García Ana Laura
  • González Juan Pedro
  • Velázquez Jhasua

Abstract

Housing is the greatest asset held by most households, and it is an important determinant of their financing and consumption decisions. Despite the fact that measuring housing wealth is crucial for understanding households' economic behavior, this indicator is currently unavailable in Mexico due to the lack of data commonly required for its estimation. This paper proposes a more flexible methodology, based on the quantity times price approach and the perpetual inventory method, that eases data requirements while still meeting international guidelines. Our results suggest housing wealth in Mexico has followed an upward trend as percentage of GDP since 2005, reaching around 187% and 202% of GDP in 2020. In addition, our measure enables the calculation of other popular indicators concerning households, such as housing equity and household total net worth.

Suggested Citation

  • García Ana Laura & González Juan Pedro & Velázquez Jhasua, 2022. "An Approach for Housing Wealth Estimation: The Mexican Case," Working Papers 2022-12, Banco de México.
  • Handle: RePEc:bdm:wpaper:2022-12
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    File URL: https://www.banxico.org.mx/publications-and-press/banco-de-mexico-working-papers/%7BD4B8DEF1-AB8E-331C-42E3-31CD8688A80C%7D.pdf
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    More about this item

    Keywords

    Housing; house hold wealth; perpetual inventory method; quantity times price approach;
    All these keywords.

    JEL classification:

    • R2 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure

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