On the user cost and homeownership

  title={On the user cost and homeownership},
  author={Antonia D{\'i}az and Mar{\'i}a J. Luengo-Prado},
This paper studies the differences in the cost of housing services for renters and homeowners and calculates the bias that results when we value owner-occupied housing services using a rental equivalence approach. Our framework is a life-cycle model with endogenous tenure choice with households facing idiosyncratic uninsurable earnings risk and housing price risk. We model houses as illiquid assets that provide collateral for loans. To analyze the impact of preferential housing taxation on the… CONTINUE READING
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