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Idiosyncratic Risk in Housing Markets Marco Giacoletti Abstract Most US households invest a substantial fraction of their wealth in a single asset their family home. I study the empirical properties of idiosyncratic housing risk and its welfare cost from the perspective of homeowners. Using micro-data from the metropolitan areas of Los Angeles San Diego and San Francisco I show that the fraction of house price standard deviation determined by idiosyncratic risk is decreasing as the holding...
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