Abstract
Residential real estate is a major asset for most households. This article focuses on three issues relating to housing as an investment. (a) Are returns to housing investment predictable? (b) What is the optimal fraction of real estate in an investment portfolio? (c) How important are borrowing constraints, and how do they influence housing prices? It concludes that housing risks are difficult to hedge in practice and that developing suitable derivative markets would fulfil an important function.
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Englund, P. (2018). Residential Real Estate and Finance. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_2076
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DOI: https://doi.org/10.1057/978-1-349-95189-5_2076
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