RENT, OWN OR REVERSE YOUR HOME?
||Marekwica, Marcel; Konstantinos Pyliouras
||RENT, OWN OR REVERSE YOUR HOME?
||Book of Abstracts: 15th Annual European Real Estate Society Conference in Kraków, Poland
||We examine the optimal dynamic portfolio decisions for investors that either rent or own a house in the presence of reverse mortgages. Using stochastic dynamic programming different scenarios are modelled to find out how the existence of reverse mortgages changes the decision or the point in time when to buy or rent a house over the life cycle. Our results highlight the importance of the home reversion option for the decision whether and when to buy a house. In addition the article extends current “rent or own” life cycle literature by adding the reverse mortgage option as new key factor that may alter previous results regarding the important determinants of home ownership.
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