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arXiv · 2507.17624

Homeownership as a Life Cycle Goldmine: Evidence from Macrohistory

Yang Bai·Shize Li·Jialu Shen
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Abstract

Should households buy their homes? Contrary to popular personal-finance and academic expert advice, our block-bootstrap life-cycle simulation suggests they should. Using 150 years of data across 16 countries, we find that homeownership raises wealth and consumption-equivalent welfare relative to saving-rate-matched benchmark strategies investing solely in financial assets. The gains come from lower portfolio risk, rent-risk hedging, access to home equity late in life for enhanced retirement consumption, and higher bequests. The gains vary with income, house-price conditions at purchase, and mortgage rates. Mortgages enable early homeownership access at the cost of lower liquidity and consumption-equivalent welfare.

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Yang Bai, Shize Li, Jialu Shen. 2025-07-23. Homeownership as a Life Cycle Goldmine: Evidence from Macrohistory. https://arxiv.org/abs/2507.17624

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