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Financial and Housing Wealth, Expenditures and the Dividend to Ownership

By Ph.D. Sheng Guo and III William G. Hardin

Abstract

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

Topics: Economics, Finance
Publisher: FIU Digital Commons
Year: 2015
DOI identifier: 10.2139/ssrn.2718332
OAI identifier: oai:digitalcommons.fiu.edu:economics_wps-1105

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