Returns to Single-Family Owner-Occupied Housing

Donald Jud and Daniel Winkler

Journal of Real Estate Practice and Education, 2005, vol. 8, issue 1, 25-44

Abstract: This study examines the rate of return and risk on single-family, owner-occupied housing nationally and at the MSA level. The homeowner using no leverage, and a 28% tax rate, earned an 11.81% annual return, 5.85% from implicit rental savings and 5.63% from price appreciation from 1978:1 to 2001:4. The use of leverage increased rates of returns as well as risk, and longer holding periods offered higher returns and lower risk. With an 80% loan-to-value ratio, homeownership returns were between Treasury bonds and stocks, although with more risk than either. Among the 42 MSAs, return and risk varied as much as threefold.

Date: 2005
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DOI: 10.1080/10835547.2005.12091607

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