Tuesday, January 09, 2018

Quantifying the Money Pit

In the months before and after buying a house, average household spending rises by $3,700 as owners repair, renovate, and decorate their new home, according to an NBER working paper.

Examining Consumer Expenditure Survey and building permit data for the 2001 to 2013 time period, the researchers find the increased spending entirely devoted to household goods and home improvements. Other categories of spending are not affected. The added spending peaks in the first quarter after a home purchase.

Source: National Bureau of Economic Research, Making the House a Home: The Stimulative Effects of Home Purchases on Consumption and Investment, Working Paper 23570 ($5)

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