Uptrading and the macroeconomic environment

Article Abstract:

The effect of the macreconomic environment on uptrading decisions is examined. Uptrading refers to decisions involved in selling a current house in favor of buying a larger one. While exogenous variables such as job transfers and family growth are also important, uptrading accounts for a part of household mobility. Nakagami and Pereira's (1991) model of household behavior with uptrading is extended to study optimal timing, value, decision-making and welfare considerations. The results indicate that a recessionary environment with low rates of housing appreciation has a negative short-term effect through uptrading postponement, but has a positive long-run impact through bigger volumes. In contrast, low real mortgage interest and inflation rates have a positive short-term effect, but a negative long-term effect. In addition, less restrictive financial ratios and lower transaction costs are likely to have counter-cyclical effects.

Economic aspects

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Budgetary and efficiency effects of housing taxation in the United States

Article Abstract:

The budgetary and efficiency consequences of the taxation of owner-occupied housing are examined in the context of a dynamic general equilibrium model of the US economy. More particularly, this study aims to find out the effects of the removal of both the deductibility of housing mortgage interest payments from the personal income tax base and the tax exemption of imputed housing rents for owner-occupants. Results of simulation show that the two policies can both improve tax revenues. However, they are found to only slightly contribute to the contraction of the GDP. In addition, both policies would marginally boost long-term allocation efficiency if there is a neutralization of tax revenue effects. Nevertheless, rigidities in housing-asset accumulation would result in short-term efficiency setbacks.

Taxation, Income tax, Mortgages, Rents (Property)

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Housing appreciation, mortgage interest rates, and homeowner mobility

Article Abstract:

A model of homeowner mobility incorporating the owners' consumption and investment motives is presented in this article. It analyzes how the optimal timing of the sale of a house in order to buy a more valuable one (trading up) is affected by macroeconomic variables, such as housing appreciation and interest rates. The optimal timing of trade-up for current homeowners and first-time homebuyers are considered.

Models, House selling, Home selling, Homeowners, House buying, Home buying

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