Risk and Return in the Single-Family Housing Market

Working Paper #96-16

Posted: 15 Nov 1996

See all articles by Theodore M. Crone

Theodore M. Crone

Swarthmore College

Richard Voith

Econsult Corporation; University of Pennsylvania - Wharton School, Department of Real Estate

Date Written: July 1996

Abstract

The tradeoff between risk and return in equity markets is well established. This paper examines the existence of the same tradeoff in the single-family housing market. For home buyers, who constitute about two-thirds of U.S. households, the choice about how much housing and which house to buy is a joint consumption/investment decision. Does this consumption/investment link negate the risk/return tradeoff within the single-family housing market? Theory suggests the link still holds. This paper supplies empirical evidence insupport of that theoretical result. The views expressed here are solely those of the author and do not necessarily represent the views of the Federal Reserve Bank of Philadelphia or of the Federal Reserve System.

JEL Classification: R21, G11

Suggested Citation

Crone, Theodore M. and Voith, Richard, Risk and Return in the Single-Family Housing Market (July 1996). Working Paper #96-16. Available at SSRN: https://ssrn.com/abstract=9177

Theodore M. Crone (Contact Author)

Swarthmore College ( email )

500 College Ave
Swarthmore, PA 19081
United States

Richard Voith

Econsult Corporation ( email )

Philadelphia, PA 19104
United States

University of Pennsylvania - Wharton School, Department of Real Estate ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States
215 382 1894 (Phone)

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