RENT, OWN OR REVERSE YOUR HOME?

Marcel Marekwica and Konstantinos Pyliouras

ERES from European Real Estate Society (ERES)

Abstract: We examine the optimal dynamic portfolio decisions for investors that either rent or own a house in the presence of reverse mortgages. Using stochastic dynamic programming different scenarios are modelled to find out how the existence of reverse mortgages changes the decision or the point in time when to buy or rent a house over the life cycle. Our results highlight the importance of the home reversion option for the decision whether and when to buy a house. In addition the article extends current ìrent or ownî life cycle literature by adding the reverse mortgage option as new key factor that may alter previous results regarding the important determinants of home ownership.

JEL-codes: R3 (search for similar items in EconPapers)
Date: 2008-01-01
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Persistent link: https://EconPapers.repec.org/RePEc:arz:wpaper:eres2008_205

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