Housing Choices and Labor Income Risk

Thomas Jansson ()
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Thomas Jansson: Monetary Policy Department, Central Bank of Sweden, Postal: Sveriges Riksbank, SE-103 37 Stockholm, Sweden

No 272, Working Paper Series from Sveriges Riksbank (Central Bank of Sweden)

Abstract: I show that individuals whose unemployment risk tends to increase more when local home prices fall optimally invest less in owner-occupied housing. Using a unique, Swedish register based database, I find that a one standard deviation increase in the covariance between individually estimated unemployment risks and local home prices implies an average increase in the value of households investments in owner-occupied housing of USD 13,300. Further, I find, in line with the predictions of my theoretical model, that same-industry couples rent more often, but, conditional on ownership, invest USD 9,200 more on average in single-family homes than different-industry couples.

Keywords: homeownership; housing demand; unemployment; house price risk (search for similar items in EconPapers)
JEL-codes: D12 D14 R21 (search for similar items in EconPapers)
Pages: 84 pages
Date: 2013-08-01
New Economics Papers: this item is included in nep-eur and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:rbnkwp:0272

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