Optimal housing decisions with autocorrelation and mean-reversion in house prices

Category: Finance Seminar
When: 08 Februar 2022
, 12:00
 - 13:15
Where: online

Returns on owner-occupied homes are subject to autocorrelation and mean-reversion. We set up a realistically calibrated life cycle model accounting for these features that demonstrates that the optimal timing of homeownership is significantly affected by the rent-to-price ratio. Consistent with the data, the model predicts homeownership rates to increase in the rent-to-price ratio.