Do households use home-ownership to insure themselves? Evidence across U.S. cities

Michael Amior, Jonathan Halket

Research output: Contribution to journalArticlepeer-review

19 Scopus citations


Are households more likely to be homeowners when "housing risk" is higher? We show that home-ownership rates and loan-to-value (LTV) ratios at the city level are strongly negatively correlated with local house price volatility. However, causal inference is confounded by house price levels, which are systematically correlated with housing risk in an intuitive way: in cities where the land value is larger relative to the local cost of structures, house prices are higher and more volatile. We disentangle the contributions of high price levels from high volatilities by building a life-cycle model of home-ownership choices. We find that higher price levels can explain most of the lower home-ownership. Higher risk in the model leads to slightly lower home-ownership and LTV ratios in high land value cities. The relationship between LTV and risk is corroborated by LTV's negative correlation with price volatility in the data and highlights the importance of including other means of incomplete insurance in models of home-ownership.

Original languageAmerican English
Pages (from-to)631-674
Number of pages44
JournalQuantitative Economics
Issue number3
StatePublished - 1 Nov 2014
Externally publishedYes

Bibliographical note

Publisher Copyright:
© 2014 Michael Amior and Jonathan Halket.


  • Home-ownership
  • Housing risk
  • Land share
  • Life-cycle
  • Loan-to-value


Dive into the research topics of 'Do households use home-ownership to insure themselves? Evidence across U.S. cities'. Together they form a unique fingerprint.

Cite this