Financial and Housing Wealth, Expenditures and the Dividend to Ownership

54 Pages Posted: 17 Jan 2017 Last revised: 15 Nov 2021

See all articles by William G. Hardin

William G. Hardin

Florida International University (FIU) - College of Business Administration

Sheng Guo

Florida International University

Date Written: January 13, 2017

Abstract

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

Hardin, William G. and Guo, Sheng, Financial and Housing Wealth, Expenditures and the Dividend to Ownership (January 13, 2017). Journal of Real Estate Finance and Economics, Vol. 54, No. 1, 2017, Available at SSRN: https://ssrn.com/abstract=2898998

William G. Hardin (Contact Author)

Florida International University (FIU) - College of Business Administration ( email )

Miami, FL 33199
United States

Sheng Guo

Florida International University ( email )

FIU Economics, DM 318A
11200 SW 8th Street
Miami, FL 33199
United States

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