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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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Paper provided by ULB -- Universite Libre de Bruxelles in its series Working Papers CEB with number 09-006.RS.

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Length: 20 p.
Date of creation: Feb 2009
Date of revision:
Publication status: Published by: Université Libre de Bruxelles, Solvay Business School, Centre Emile Bernheim (CEB)
Handle: RePEc:sol:wpaper:09-006
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