Financial and Housing Wealth, Expenditures and the Dividend to Ownership

Sheng Guo and William Hardin

No 1506, Working Papers from Florida International University, Department of Economics

Abstract: For a household, home ownership provides necessary shelter, potential investment returns associated with property appreciation and a hedge against increased housing related cash outlays. In addition to potential appreciation, individual households benefit over time from a housing dividend defined as the difference between the market rent for the individual household's housing unit and the household's actual house ownership costs. The purchase of a house can substantially fix a household's recurring housing related expenditures and generates a hedge (implied housing dividend) that increases with ownership tenure. This expenditure hedge (dividend) to home ownership is documented using pooled, cross-year samples from the Consumer Expenditure Survey (CEX). The housing dividend delivers a non-trivial effect on household non-housing expenditures after controlling for housing value, housing equity, financial assets and income.

Keywords: Housing; Imputed Rent; Consumption; Wealth Effect; Expenditure; Dividend (search for similar items in EconPapers)
JEL-codes: D11 D12 G14 R21 R31 (search for similar items in EconPapers)
Pages: 54 pages
Date: 2015-09
New Economics Papers: this item is included in nep-ure
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https://economics.fiu.edu/research/pdfs/2015_working_papers/1506.pdf First version, 2015 (application/pdf)

Related works:
Journal Article: Financial and Housing Wealth, Expenditures and the Dividend to Ownership (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:fiu:wpaper:1506

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