Valuing Homeownership

Khalid Sekkat and Ariane Szafarz

No 09-006.RS, Working Papers CEB from Université Libre de Bruxelles, Solvay Brussels School of Economics and Management, Centre Emile Bernheim (CEB)

Abstract: 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.

Keywords: Homeownership; tenure choice; housing; real-estate. (search for similar items in EconPapers)
JEL-codes: R21 E21 G11 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-geo and nep-ure
Date: 2009-02
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http://www.solvay.edu/EN/Research/Bernheim/documents/wp09006.pdf First version, 2009 (application/pdf)

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Working Paper: Valuing homeownership (2009)
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Persistent link: http://EconPapers.repec.org/RePEc:sol:wpaper:09-006

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