Jie Zhou, University of Winnipeg

Fri. Oct. 3 02:30 PM - Fri. Oct. 3 04:00 PM
Location: 3BC55

"Housing and Tax-deferred Accounts: Evidence from the Survey of Consumer Finances"

Abstract: This paper examines the relationship between tax-deferred accounts (TDAs) and home ownership. TDAs can influence home ownership through two counteracting channels: a wealth channel and a liquidity channel. Using data from the Survey of Consumer Finances, we find that households with a TDA are 7.7 percentage points more likely to own a home than comparable households without a TDA, with the strongest effect observed among those aged 35 - 44. This finding suggests that the wealth effect outweighs the liquidity constraint. We also find that having a TDA is associated with a higher loan-to-value (LTV) ratio — by approximately 9.8 percentage points — among homeowners. Our results indicate that households consider retirement savings in TDAs and housing investment jointly when making financial decisions.