Abstract: This paper uses a mean-variance portfolio selection framework to examine the Ch inese household's optimal asset allocation in the presence of housing. We analyz e the efficient frontiers and optimal portfolio weights of different constraints on housing to net wealth ratio. Our analysis indicates that housing varies the balance of risk and benefit of portfolio. Household improves the risk and benefi t of his asset with the increase of the value of h. Owing to the high value of h and strong liquidity constraints, young resident reduces stock to finan cial asset ratio. In order to achieve more benefits, the resident increases stoc k to financial asset ratio with the decrease of h. Old resident selects a co nservative asset portfolio, and reduces his stock to financial asset ratio becau se of low value of h.