The Relation Between Financial and Housing Wealth of Dutch Households

Abstract

We analyze households' joint investment decisions for financial wealth and homes.In our bivariate censored regression model with endogenous switching, fixed costs or transaction costs are captured by a threshold that has to be passed before the purchase.The model allows for spill-over effects of a binding threshold for one asset on the demand for the other asset.We find that tenure choice affects the level of financial wealth.Our results do not support the view that people first accumulate financial wealth before acquiring homes.This can be due to the absence of down payment constraints in the Netherlands.housing;household economics;The Netherlands