Homeownership as a Life Cycle Goldmine: Evidence from Macrohistory
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.
econ.GN↗