Homeownership as Life Cycle Goldmine: Evidence from Macrohistory (opens in new tab)

Should households buy their homes? Contrary to popular expert advice, our block-bootstrap lifecycle simulation provides an affirmative answer. Homeownership generates wealth and welfare gains relative to rent-for-life benchmarks that invest only in financial assets. It lowers household portfolio downside risk and improves retirement consumption and bequest outcomes. The gains reflect risk aversion, intertemporal substitution, leverage-induce...