Home Equity in Retirement
Abstract: Retired homeowners dissave more slowly than renters, which suggests that homeownership a?ects retirees? saving decisions. We investigate empirically and theoretically the life-cycle patterns of homeownership, housing and nonhousing assets in retirement. Using an estimated structural model of saving and housing decisions, we ?nd, ?rst, that homeowners dissave slowly because they prefer to stay in their house as long as possible but cannot easily borrow against it. Second, the 1996-2006 housing boom signi?cantly increased homeowners? assets. These channels are quantitatively signi?cant; without considering homeownership, retirees? net worth would be 28-44 percent lower, depending on age.
File(s): File format is application/pdf https://www.philadelphiafed.org/-/media/frbp/assets/working-papers/2019/wp19-50.pdf
Provider: Federal Reserve Bank of Philadelphia
Part of Series: Working Papers
Publication Date: 2019-12-09
Pages: 56 pages