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The Resale Housing Market

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  • Kenneth T. Rosen
  • Lawrence B. Smith

Abstract

This paper describes and analyzes the structure and operation of the market for existing single‐family homes. The paper develops aggregative models of sales and renovation activity based on the adjustment choice decisions of households to alter their housing consumption by moving or by undertaking renovations. The models demonstrate that housing resales and renovation expenditures occur when the present value of the gains associated with a housing adjustment exceeds the costs of the transaction. The choice of the adjustment mode is shown to be significantly influenced by the relative transactions costs of moving versus renovating.

Suggested Citation

  • Kenneth T. Rosen & Lawrence B. Smith, 1986. "The Resale Housing Market," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 14(4), pages 510-524, December.
    • Handle: RePEc:bla:reesec:v:14:y:1986:i:4:p:510-524
    DOI: 10.1111/1540-6229.00400
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    References listed on IDEAS

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    1. Mahlon R. Straszheim, 1975. "An Econometric Analysis of the Urban Housing Market," NBER Books, National Bureau of Economic Research, Inc, number stra75-1.
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    Cited by:

    1. W. Paul Strassmann, 2000. "Mobility and Affordability in US Housing," Urban Studies, Urban Studies Journal Limited, vol. 37(1), pages 113-126, January.

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