Working Paper

Partial Homeownership: A Quantitative Analysis


Abstract: Partial Ownership (PO), which allows households to buy a fraction of a home and rent the remainder, is increasing in many countries with housing affordability challenges. We incorporate an existing for-profit PO contract into a life-cycle model to quantify its impact on homeownership, households’ welfare, and its implications for financial stability. We have the following results: 1) PO increases homeownership rates. 2) Willingness to pay increases with housing unaffordability and is highest among low-income and renting households. 3) PO increases aggregate debt as renters become partial owners but also reduces the average leverage ratios as indebted homeowners become partial owners.

Keywords: Partial Homeownership; Housing Affordability; Financial Innovation; Financial Stability;

JEL Classification: G28; G23; E20; R20; E21;

https://doi.org/10.17016/FEDS.2024.070

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Bibliographic Information

Provider: Board of Governors of the Federal Reserve System (U.S.)

Part of Series: Finance and Economics Discussion Series

Publication Date: 2024-08-28

Number: 2024-070