The theory posits that residential housing assets do not function primarily as superior financial investments due to price volatility and opportunity costs, but rather serve specific non-financial utility functions driven by the marginal valuation of stability, location-specific amenities (e.g., school districts), and forced savings mechanisms. Within asset pricing economics, mortgage interest deductions are identified theoretically as supply-side factors embedded in equilibrium prices rather than net benefits for individual buyers, contingent upon income thresholds required to itemize tax liabilities. This concept belongs to Real Estate Economics and Portfolio Theory, illustrating how rational homeownership decisions must be analyzed at the margin by comparing an agent's specific preferences against population averages while accounting for systemic risks such as land scarcity and geographic concentration.
The theory posits that residential housing assets do not function primarily as superior financial investments due to price volatility and opportunity costs, but rather serve specific non-financial ut…