Yet Another View on Why a Home Is One's Castle
We compute equity-based real after-tax rates of return for homeowners and landlords in the United States for 1952-2005. The study confirms that a combined aggregate for residential housing provides a high average net return and low volatility, has low correlation with financial assets and can provide hedge against inflation. The efficient frontier analysis shows that the optimal portfolio for a household with a coefficient of relative risk aversion of four to five is one which contains a bit larger amount of housing than stocks, close to what one observes in the real world. Copyright (c) 2009 American Real Estate and Urban Economics Association.
Year of publication: |
2009
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Authors: | Hasanov, Fuad ; Dacy, Douglas C. |
Published in: |
Real Estate Economics. - American Real Estate and Urban Economics Association - AREUEA. - Vol. 37.2009, 1, p. 23-41
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Publisher: |
American Real Estate and Urban Economics Association - AREUEA |
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