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Financial and Housing Wealth, Expenditures and the Dividend to Ownership

Listed author(s):
  • Sheng Guo

    ()

    (Department of Economics, Florida International University)

  • William Hardin

    ()

    (Tibor and Sheila Hollo School of Real Estate, College of Business Administration, Florida International University)

For a household, home ownership provides necessary shelter, potential investment returns associated with property appreciation and a hedge against increased housing related cash outlays. In addition to potential appreciation, individual households benefit over time from a housing dividend defined as the difference between the market rent for the individual household's housing unit and the household's actual house ownership costs. The purchase of a house can substantially fix a household's recurring housing related expenditures and generates a hedge (implied housing dividend) that increases with ownership tenure. This expenditure hedge (dividend) to home ownership is documented using pooled, cross-year samples from the Consumer Expenditure Survey (CEX). The housing dividend delivers a non-trivial effect on household non-housing expenditures after controlling for housing value, housing equity, financial assets and income.

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File URL: http://economics.fiu.edu/research/working-papers/2015/1506/1506.pdf
File Function: First version, 2015
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Paper provided by Florida International University, Department of Economics in its series Working Papers with number 1506.

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Length: 54 pages
Date of creation: Sep 2015
Handle: RePEc:fiu:wpaper:1506
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Web page: http://economics.fiu.edu

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