Financial and Housing Wealth, Expenditures and the Dividend to Ownership
54 Pages Posted: 17 Jan 2017 Last revised: 15 Nov 2021
Date Written: January 13, 2017
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: Hosuing; Imputed rent; Consumption; Wealth effect; Expenditure; Dividend
JEL Classification: D11, D12, G14, R21, R31
Suggested Citation: Suggested Citation