Residential Wealth and Its Distribution in the Rio de Janeiro Metropolitan Region

Given the importance of housing as a component of a household’s net worth and of aggregate national wealth, we ask: What variables determine housing value in the Rio de Janeiro Metropolitan Region? What is Rio’s aggregate residential wealth (i.e., the sum of the values of all housing units) and its distribution among household income and tenure groups and in space? In other words, what generates residential wealth? How much residential wealth is there? Who holds it? Where is it located? To address these questions, we first calibrate a hedonic residential rent model with microdata from 2010 Population Census. We then use this model to estimate the rents for homeowners, and subsequently transform the actual and imputed rents into housing values by dividing them by the discount rate. Finally, we analyze the distribution of residential wealth by household income and tenure and subregions, and discuss the policy implications of our findings.

Keywords: Brazil, Rio de Janeiro, urban, housing, stock, value, wealth, rent, hedonic model, regression, principal components, access to employment, commute time, neighborhood, location, spatial, equity