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The Long-Term Consequences of Shocks to Housing Wealth: Insights from History

Project description

A historical look at housing wealth

How does the level of house prices during home-buying years impact lifetime wealth accumulation? What is the effect of tax-driven losses and gains in housing wealth? How do shocks to property- and neighbourhood-level housing returns affect long-term housing values? The EU-funded HISHOUSHOCK project will answer these questions. It will explore the differences in housing wealth and housing values. Since these are related to economic trends and the individual choices of households, the property and the owner are two important factors. The project will conduct studies in the context of historical Amsterdam that exploit shocks to housing wealth to investigate their impact over the long run.

Objective

Climbing the housing ladder is the most important way for households to accumulate wealth, but households differ significantly in their access to housing wealth and the housing returns they realize. The goal of this project is to investigate the long-term impact of shocks to housing values on the wealth of individuals and their neighborhoods.

Measuring the impact of such shocks is difficult, because differences in housing wealth and housing values are typically closely related to economic trends and the individual choices of households, making it difficult to identify variation in housing wealth that is unrelated to the property or its owner. The limited availability of long-term data on the wealth of individuals further constrains the possibility to study long-term effects.

The solution I take in this project is to go back into the past. I propose a set of three studies in the context of historical Amsterdam that exploit shocks to housing wealth to investigate their impact over the long run. The particular institutional setting of Amsterdam in the 18th and 20th centuries allows me to isolate changes in housing wealth or access to housing wealth that are unrelated to individuals or economic conditions, and whose effects can be traced using extensive recently-digitized archival records.

The first study examines how the level of house prices when individuals enter their home-buying years affects their lifetime wealth accumulation. In the second study, I investigate how tax-driven losses and gains in housing wealth affect the income and wealth of individuals and their offspring. In the final study, I take the house as a unit of observation and investigate how shocks to property- and neighborhood-level housing returns affect long-term housing values.

The proposed project will be hosted by the Erasmus School of Economics and Columbia Business School, making use of world-leading knowledge and training in real estate and financial history.

Coordinator

ERASMUS UNIVERSITEIT ROTTERDAM
Net EU contribution
€ 211 735,68
Address
Burgemeester oudlaan 50
3062 PA Rotterdam
Netherlands

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Region
West-Nederland Zuid-Holland Groot-Rijnmond
Activity type
Higher or Secondary Education Establishments
Links
Other funding
€ 0,00

Partners (1)