The timing of housing tenure transition
Article Abstract:
Analysis of housing demand should cover both consumption elements and financial considerations, since housing acts as both a consumption good and an investment good. It should be noted in particular that part of the expense of purchasing housing is the assumption of significant portfolio risk, stemming from households' limited capacity to diversify portfolios once housing purchases are made. The selection of timing a transition from rental housing to home ownership also reflects both financial and consumption elements. Households have some motivation to delay ownership in order to accumulate more wealth beyond that which is needed to make a down payment. Non-housing wealth can be increased and invested in financial assets to create a partial hedge against the exposed long position in housing associated with home ownership.
Publication Name: Journal of Urban Economics
Subject: Government
ISSN: 0094-1190
Year: 1987
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Residential capitalization rates: explaining intermetropolitan variation, 1974-1979
Article Abstract:
Examination of housing capitalization rates during the 1974-1979 period reveals that market rents and house values are not in a fixed relationship with each other. The relationship is based on a complex interaction between the cost of capital, inflation rates, tax treatment of residential property, local rent control, and expectations for the future. Asset values are shown to be large relative to current market rents when real after-tax financing expenses and operating costs are low, when there is high inflation, and when market rents are restrained by local rent controls.
Publication Name: Journal of Urban Economics
Subject: Government
ISSN: 0094-1190
Year: 1988
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