Residential Wealth and Its Interpersonal and Spatial Distribution in the Rio de Janeiro Metropolitan Region

Abstract

Given the importance of housing as a component of a household’s worth and of aggregate national wealth, we ask: What variables determine housing value in the Rio de Janeiro Metropolitan Region? What is Rio’s aggregate residential wealth (i.e., the sum of the values of all housing units) and its distribution among household income and tenure groups and in space? In other words, what generates residential wealth? How much residential wealth is there? Who holds it? Where is it located? To address these questions, we first calibrate a hedonic residential rent model with microdata from the 2010 Population Census. We then use this model to estimate the rents for homeowners and subsequently transform the actual and imputed rents into housing values. Finally, we analyze the distribution of residential wealth by household income and tenure and subregions and discuss the policy implications of our findings.

Keywords: Brazil, Rio de Janeiro, hedonic rent model, housing value, measurement national wealth accounts, household income, access to employment, commute time, neighborhood effects, location, equity

JEL Classification: D31, R14, R21, R32