Partial Homeownership: A Quantitative Analysis

58 Pages Posted: 24 Jul 2023 Last revised: 26 Dec 2023

See all articles by Eirik E. Brandsaas

Eirik E. Brandsaas

Board of Governors of the Federal Reserve System

Jens Soerlie Kvaerner

Tilburg University

Date Written: December 23, 2023


Partial Ownership (PO), which allows households to buy a fraction of a home and rent the remainder, is increasingly popular in many countries, including China, Australia, and Norway. We incorporate an existing for-profit PO contract into a life-cycle model. The model allows us to quantify the effects of PO on household welfare and discuss potential implications for financial stability. The average welfare gain for households below 55 is $3,500 or 10% of their annual income, exceeding estimates for reverse mortgages. Welfare gains increase with housing unaffordability and are highest among low-income and renting households. Additional analysis reveals that PO increases aggregate debt as renters become partial owners—and simultaneously—reduces the number of highly leveraged homeowners who substitute traditional ownership for PO.

Keywords: Household Finance, Housing, Financial Innovation, House Prices, Affordable Housing, Financial Stability

JEL Classification: G5, G51

Suggested Citation

Brandsaas, Eirik E. and Soerlie Kvaerner, Jens, Partial Homeownership: A Quantitative Analysis (December 23, 2023). Available at SSRN: or

Eirik E. Brandsaas

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Jens Soerlie Kvaerner (Contact Author)

Tilburg University ( email )

Warandelaan 2
Tilburg, -- 4818HK
40242704 (Phone)
0364 (Fax)


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