IDEAS home Printed from https://ideas.repec.org/a/bla/reesec/v15y1987i1p601-616.html
   My bibliography  Save this article

Has the United States Overinvested in Housing?

Author

Listed:
  • Edwin S. Mills

Abstract

Several economists have concluded that housing investment has been excessive relative to industrial investment in the U.S. Most blame provisions of the federal income tax that favor owner‐occupied housing. This paper poses the question within a two‐sector neoclassical growth model which permits the social return to housing to differ from that to non‐housing. The model is estimated using national income accounts and capital stock data from 1929 to 1983. The conclusion is that the return to housing capital is about half that to non‐housing capital and that the housing stock should be about 75% of its 1983 volume.

Suggested Citation

  • Edwin S. Mills, 1987. "Has the United States Overinvested in Housing?," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 15(1), pages 601-616, March.
    • Handle: RePEc:bla:reesec:v:15:y:1987:i:1:p:601-616
    DOI: 10.1111/1540-6229.00406
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/1540-6229.00406
    Download Restriction: no
    File URL: https://libkey.io/10.1111/1540-6229.00406?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Roger H. Gordon & James R. Hines, Jr. & Lawrence H. Summers, 1987. "Notes on the Tax Treatment of Structures," NBER Chapters, in: The Effects of Taxation on Capital Accumulation, pages 223-258, National Bureau of Economic Research, Inc.
    2. Martin Feldstein, 1983. "Inflation, Tax Rules, and the Accumulation of Residential and Nonresidential Capital," NBER Chapters, in: Inflation, Tax Rules, and Capital Formation, pages 81-100, National Bureau of Economic Research, Inc.
    3. Patric H. Hendershott, 1982. "Government Policies and the Allocation of Capital Between Residential and Industrial Uses," NBER Working Papers 1036, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bertay, Ata Can & Gong, Di & Wagner, Wolf, 2017. "Securitization and economic activity: The credit composition channel," Journal of Financial Stability, Elsevier, vol. 28(C), pages 225-239.
    2. Lawrence White, 2003. "Focusing on Fannie and Freddie: The Dilemmas of Reforming Housing Finance," Journal of Financial Services Research, Springer;Western Finance Association, vol. 23(1), pages 43-58, February.
    3. Boehm, Thomas P. & Schlottmann, Alan M., 1999. "Does Home Ownership by Parents Have an Economic Impact on Their Children?," Journal of Housing Economics, Elsevier, vol. 8(3), pages 217-232, September.
    4. Brent W. Ambrose & Dong Wook Lee, 2009. "REIT Capital Budgeting and Equity Marginal q," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 37(3), pages 483-514, September.
    5. Green, Richard K. & White, Michelle J., 1997. "Measuring the Benefits of Homeowning: Effects on Children," Journal of Urban Economics, Elsevier, vol. 41(3), pages 441-461, May.
    6. Lori L. Taylor, 1998. "Does the United States still overinvest in housing?," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, issue Q II, pages 10-18.
    7. Dietz, Robert D. & Haurin, Donald R., 2003. "The social and private micro-level consequences of homeownership," Journal of Urban Economics, Elsevier, vol. 54(3), pages 401-450, November.
    8. W. Scott Frame & Lawrence J. White, 2005. "Fussing and Fuming over Fannie and Freddie: How Much Smoke, How Much Fire?," Journal of Economic Perspectives, American Economic Association, vol. 19(2), pages 159-184, Spring.
    9. Kim, Kyung-Hwan, 2004. "Housing and the Korean economy," Journal of Housing Economics, Elsevier, vol. 13(4), pages 321-341, December.
    10. Ricardo Sabates Land Tenure Center & UW-Madison, 2001. "The Dynamics of U.S. GDP and Investment Sub-Components," Wisconsin-Madison CULER working papers 01-05, University of Wisconsin Center for Urban Land Economic Research.
    11. David Albouy & Andrew Hanson, 2014. "Are Houses Too Big or In the Wrong Place? Tax Benefits to Housing and Inefficiencies in Location and Consumption," Tax Policy and the Economy, University of Chicago Press, vol. 28(1), pages 63-96.
    12. Lawrence White, 2002. "Reforming Fannie and Freddie: Privatization is the Way," Working Papers 02-10, New York University, Leonard N. Stern School of Business, Department of Economics.
    13. Renaud, Bertrand & INU, 1988. "Compounding financial repression with rigid urban regulations : lessons of the Korea housing market," Policy Research Working Paper Series 360, The World Bank.
    14. G Hack & A Skaburskis, 1992. "Lessons from Canada's Housing R&D Experience," Environment and Planning C, , vol. 10(1), pages 61-76, March.
    15. Liu Hongyu & Yun W. Park & Zheng Siqi, 2002. "The Interaction between Housing Investment and Economic Growth in China," International Real Estate Review, Global Social Science Institute, vol. 5(1), pages 40-60.
    16. Yu Kong & John L. Glascock & Ran Lu-Andrews, 2016. "An Investigation into Real Estate Investment and Economic Growth in China: A Dynamic Panel Data Approach," Sustainability, MDPI, vol. 8(1), pages 1-18, January.
    17. Wall, Larry D. & Eisenbeis, Robert A. & Frame, W. Scott, 2005. "Resolving large financial intermediaries: Banks versus housing enterprises," Journal of Financial Stability, Elsevier, vol. 1(3), pages 386-425, April.
    18. Hanson, Andrew, 2012. "Size of home, homeownership, and the mortgage interest deduction," Journal of Housing Economics, Elsevier, vol. 21(3), pages 195-210.
    19. Timothy Bisping & Hilde Patron, 2008. "Residential Investment and Business Cycles in an Open Economy: A Generalized Impulse Response Approach," The Journal of Real Estate Finance and Economics, Springer, vol. 37(1), pages 33-49, July.
    20. William Miles, 2009. "Housing Investment and the U.S. Economy: How Have the Relationships Changed?," Journal of Real Estate Research, American Real Estate Society, vol. 31(3), pages 329-350.
    21. Michael Devaney & William Rayburn, 1988. "When a House Is More Than a Home: Performance of the Household Portfolio," Journal of Real Estate Research, American Real Estate Society, vol. 3(1), pages 75-85.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. David Barker & Jay Sa‐Aadu, 2004. "Is Real Estate Becoming Important Again? A Neo‐Ricardian Model of Land Rent," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 32(1), pages 33-53, March.
    2. Joseph Gyourko & Richard Voith, 1997. "Does the U.S. tax treatment of housing promote suburbanization and central city decline?," Working Papers 97-13, Federal Reserve Bank of Philadelphia.
    3. Isaac F. Megbolugbe & Peter D. Linneman, 1993. "Home Ownership," Urban Studies, Urban Studies Journal Limited, vol. 30(4-5), pages 659-682, May.
    4. Richard Voith, 1999. "Does the tax treatment of housing create an incentive for exclusionary zoning and increased decentralization?," Working Papers 99-22, Federal Reserve Bank of Philadelphia.
    5. Theodore Panagiotidis & Panagiotis Printzis, 2016. "On the macroeconomic determinants of the housing market in Greece: a VECM approach," International Economics and Economic Policy, Springer, vol. 13(3), pages 387-409, July.
    6. Mihir A. Desai & William M. Gentry, 2004. "The Character and Determinants of Corporate Capital Gains," NBER Chapters, in: Tax Policy and the Economy, Volume 18, pages 1-36, National Bureau of Economic Research, Inc.
    7. Lawrence H. Summers, 1987. "Should Tax Reform Level the Playing Field?," NBER Working Papers 2132, National Bureau of Economic Research, Inc.
    8. Skinner, Jonathan, 1989. "Housing wealth and aggregate saving," Regional Science and Urban Economics, Elsevier, vol. 19(2), pages 305-324, May.
    9. Roger H. Gordon & Joel Slemrod, 1988. "Do We Collect Any Revenue from Taxing Capital Income?," NBER Chapters, in: Tax Policy and the Economy: Volume 2, pages 89-130, National Bureau of Economic Research, Inc.
    10. Fullerton, Don & Mackie, James B. III, 1989. "Economic Efficiency in Recent Tax Reform History: Policy Reversals or Consistent Improvements?," National Tax Journal, National Tax Association;National Tax Journal, vol. 42(1), pages 1-13, March.
    11. Roger Gordon & Laura Kalambokidis & Joel Slemrod, 2003. "A New Summary Measure of the Effective Tax Rate on Investment," NBER Working Papers 9535, National Bureau of Economic Research, Inc.
    12. Hines, James Jr., 2004. "On the timeliness of tax reform," Journal of Public Economics, Elsevier, vol. 88(5), pages 1043-1059, April.
    13. Andrew Coleman, 2008. "Tax, Credit Constraints, and the Big Costs of Small Inflation," Working Papers 08_14, Motu Economic and Public Policy Research.
    14. Alan J. Auerbach & David Reishus, 1988. "The Effects of Taxation on the Merger Decision," NBER Chapters, in: Corporate Takeovers: Causes and Consequences, pages 157-190, National Bureau of Economic Research, Inc.
    15. Lawrence H. Summers, 1987. "Investment Incentives and the Discounting of Depreciation Allowances," NBER Chapters, in: The Effects of Taxation on Capital Accumulation, pages 295-304, National Bureau of Economic Research, Inc.
    16. Poterba, James M, 1987. "Tax Evasion and Capital Gains Taxation," American Economic Review, American Economic Association, vol. 77(2), pages 234-239, May.
    17. Goulder, Lawrence H. & Thalmann, Philippe, 1993. "Approaches to efficient capital taxation : Leveling the playing field vs. living by the golden rule," Journal of Public Economics, Elsevier, vol. 50(2), pages 169-196, February.
    18. Robert Topel & Sherwin Rosen, 1985. "A Time Series Model of Housing Investment in the U.S," UCLA Economics Working Papers 387, UCLA Department of Economics.
    19. Berkovec, James & Fullerton, Don, 1989. "The General Equilibrium Effects of Inflation on Housing Consumption and Investment," American Economic Review, American Economic Association, vol. 79(2), pages 277-282, May.
    20. Alan J. Auerbach & James M. Poterba, 1987. "Tax Loss Carryforwards and Corporate Tax Incentives," NBER Chapters, in: The Effects of Taxation on Capital Accumulation, pages 305-342, National Bureau of Economic Research, Inc.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:reesec:v:15:y:1987:i:1:p:601-616. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/areueea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.