The sweet burden: Does homeownership improve the economic status of households?

This study utilizes household-level micro survey data from China to investigate the impact of homeownership on the economic status of households and the underlying mechanisms. The findings reveal that homeownership does not enhance the economic status of households. This outcome may be attributed to the inherent immobility of housing as a physical asset and the substantial financial pressure imposed by housing loans, leading to a "housing mortgage slave effect" and reduced job mobility among homeowners. These conclusions remain robust after accounting for endogeneity issues and preforming a series of robustness checks. Moreover, the study finds that homeownership is significantly and negatively associated with changes in the economic status of households without intergenerational financial support, whereas it has no significant effect on those without such support. This suggests that financial supports can alleviate the burden of mortgage debt, therefore mitigating the adverse relationship between homeownership and changes in household economic status.

Manyi Luo, Shihu Zhong, Jie Chen