Why Do Households Concentrate Their Wealth in Housing?

16 Pages Posted: 28 Dec 2006

See all articles by John D. Benjamin

John D. Benjamin

American University - Kogod School of Business

Peter T. Chinloy

American University - Department of Finance and Real Estate

G. Donald Jud

University of North Carolina (UNC) at Greensboro - Department of Accounting and Finance

Abstract

An apparent paradox in household wealth accumulation in the United States is the relatively small holding of financial assets and the large holding of housing wealth. To explain the high concentration of household wealth in housing, this paper estimates the marginal propensity to consume from housing and from financial assets. A higher marginal propensity to consume from housing rather than from financial assets would lead households to concentrate their wealth in real estate. For aggregate U.S. quarterly data from 1952:1 to 2002:2, the marginal propensity to consume from housing is higher than that from financial wealth. These conditions provide a rationale for the concentration of household assets in housing.

Keywords: housing wealth, household, wealth

JEL Classification: C12, C15, C31, C40,C35,C51,C33,R21,R32,O42,J26,D81

Suggested Citation

Benjamin, John D. and Chinloy, Peter and Jud, G. Donald, Why Do Households Concentrate Their Wealth in Housing?. Journal of Real Estate Research Vol. 26, No. 4, 2004. Available at SSRN: https://ssrn.com/abstract=953925

John D. Benjamin (Contact Author)

American University - Kogod School of Business ( email )

4400 Massachusetts Avenue NW
Department of Finance
Washington, DC 20016
United States
(202) 885-1892 (Phone)
(202) 885-1946 (Fax)

Peter Chinloy

American University - Department of Finance and Real Estate ( email )

Kogod School of Business
4400 Massachusetts Ave., N.W.
Washington, DC 20016-8044
United States
202-885-1951 (Phone)
202-885-1992 (Fax)

G. Donald Jud

University of North Carolina (UNC) at Greensboro - Department of Accounting and Finance ( email )

P.O. Box 26165
Greensboro, NC 27412
United States
336-334-3091 (Phone)
336-334-4141 (Fax)

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