Housing Wealth Has Minimal Impact on Non-Housing Consumption, Study Finds.
The impact of housing wealth on non-housing consumption is not as significant as previously thought. Changes in housing wealth may not have a big effect on spending outside of housing. Previous studies did not consider that changes in housing wealth could be linked to changes in expected permanent income, which could skew the results. When this bias is taken into account, it is found that housing wealth actually has a small and insignificant effect on consumption. Time-series analysis further supports this conclusion.