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A Note on Inflation and Relative Tenure Prices

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  • Douglas B. Diamond

Abstract

This article develops a simplified model of housing costs to analyze the effects of the expected rate of inflation on residential tenure choice. Inflation, working though the Federal Tax Code, affects a number of the components of housing costs in ways which vary between tenure modes. On net, the tax subsidy to owner‐occupancy is more positively leveraged with respect to expected inflation than are tax preferences for rental residential real estate. In fact, it is likely that higher expectations of inflation will reduce the after‐tax cost of owner‐occupied housing.

Suggested Citation

  • Douglas B. Diamond, 1978. "A Note on Inflation and Relative Tenure Prices," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 6(4), pages 438-450, December.
    • Handle: RePEc:bla:reesec:v:6:y:1978:i:4:p:438-450
    DOI: 10.1111/1540-6229.00190
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    Cited by:

    1. Patric H. Hendershott & Thomas G. Thibodeau & Halbert C. Smith, 2009. "Evolution of the American Real Estate and Urban Economics Association1," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 37(4), pages 559-598, December.
    2. Fortin, Mario, 1991. "Une comparaison des taux d’imposition implicites des services du logement locatif et du logement occupé par son propriétaire," L'Actualité Economique, Société Canadienne de Science Economique, vol. 67(1), pages 37-57, mars.
    3. George Fallis & Lawrence B. Smith, 1985. "Rent Control in Toronto: Tentant Rationing and Tenant Benefits," Canadian Public Policy, University of Toronto Press, vol. 11(3), pages 543-550, September.
    4. Stephen Malpezzi, 1990. "Urban Housing and Financial Markets: Some International Comparisons," Urban Studies, Urban Studies Journal Limited, vol. 27(6), pages 971-1022, December.
    5. Lawrence B. Smith & Kenneth T. Rosen & Anil Markandya & Pierre-Antoine Ullmo, 1984. "The Demand for Housing, Household Headship Rates, and Household Formation: An International Analysis," Urban Studies, Urban Studies Journal Limited, vol. 21(4), pages 407-414, November.

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