Volume
26,
Number 4, 2004 of the Journal of Real Estate Research
Why do Households Concentrate Their Wealth
in Housing?
John D. Benjamin
Department of Finance and Real Estate
Kogod School of Business, American University
4400 Massachusetts Avenue, NW
Washington, DC 20016
(202) 885-1892
jbenj@american.edu
|
Peter Chinloy
Department of Finance and Real Estate
Kogod School of Business, American University
4400 Massachusetts Avenue, NW
Washington, DC 20016
(202) 885-1951
chinloy@american.edu |
G. Donald Jud
Department of Finance, School of Business
University of North Carolina, Greensboro
Greensboro, North Carolina 27412
(910) 334-3091
juddon@uncg.edu |
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.
|
