Single-Family Housing and Wealth Portfolios

This paper explores the risk and return of a portfolio of single-family housing during 1978:1–2001:4 in the context of a portfolio of financial assets. Homeownership offers higher returns to those who have higher tax brackets, longer investment horizons and use more financial leverage. Housing retur...

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Bibliographic Details
Published in:The journal of real estate portfolio management 2006-01, Vol.12 (1), p.13-22
Main Authors: Jud, G. Donald, Wingler, Tony R., Winkler, Daniel T.
Format: Article
Language:English
Subjects:
Capital returns
Costs
Diversification
Empirical research
Financial investments
Financial portfolios
Home ownership
Homeowners
Households
Houses
Housing
Housing market
Housing prices
Institutional investments
Interest rates
Investment return rates
Investment returns
Investment risk
Limited partnerships
Metropolitan statistical areas
One-parent families
Partnership interest
Portfolio investments
Portfolio management
Portfolio selection
Property taxes
Real estate financing
Real estate market
Real estate taxes
Refinancing
Return on investment
Risk
Single family
Studies
Tax allocation
Tax rates
U.S.A
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Summary:This paper explores the risk and return of a portfolio of single-family housing during 1978:1–2001:4 in the context of a portfolio of financial assets. Homeownership offers higher returns to those who have higher tax brackets, longer investment horizons and use more financial leverage. Housing returns are positively correlated with large-stock returns and negatively correlated with returns on small stocks and debt securities. Portfolio allocation to housing is large in a minimum variance portfolio, and it increases with longer holding periods and higher tax brackets. Homeownership risk and return vary widely among the forty-two MSAs studied, and within an MSA, housing returns exhibit substantial variation.
ISSN:1083-5547
2691-1205
DOI:10.1080/10835547.2006.12089734