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Expectations and Urban Housing Prices

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  • John F. McDonald

    (Department of Economics, University of Illinois, Chicago, Illinois)

Abstract

This paper presents a simple model of price expectations and urban housing prices. The empirical results for a sample of houses sold in the city of Chicago during 1970-1972 indicate that the expectation of nominal price increase, estimated as an extrapolation of past price increases in the neighborhood, have a significant impact on the current price.

Suggested Citation

  • John F. McDonald, 1985. "Expectations and Urban Housing Prices," Urban Studies, Urban Studies Journal Limited, vol. 22(6), pages 543-549, December.
    • Handle: RePEc:sae:urbstu:v:22:y:1985:i:6:p:543-549
    DOI: 10.1080/00420988520080901
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    References listed on IDEAS

    as
    1. James M. Poterba, 1983. "Tax Subsidies to Owner-occupied Housing: An Asset Market Approach," Working papers 339, Massachusetts Institute of Technology (MIT), Department of Economics.
    2. Kearl, J R, 1979. "Inflation, Mortgages, and Housing," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 1115-1138, October.
    3. McDonald, John F., 1980. "The use of proxy variables in housing price analysis," Journal of Urban Economics, Elsevier, vol. 7(1), pages 75-83, January.
    4. Ranney, Susan I, 1981. "The Future Price of Houses, Mortgage Market Conditions, and the Returns to Homeownership," American Economic Review, American Economic Association, vol. 71(3), pages 323-333, June.
    5. Clapp, John M., 1980. "The elasticity of substitution for land: The effects of measurement errors," Journal of Urban Economics, Elsevier, vol. 8(2), pages 255-263, September.
    6. Bender, Bruce & Hwang, Hae-Shin, 1985. "Hedonic housing price indices and secondary employment centers," Journal of Urban Economics, Elsevier, vol. 17(1), pages 90-107, January.
    7. Nerlove, Marc, 1983. "Expectations, Plans, and Realizations in Theory and Practice," Econometrica, Econometric Society, vol. 51(5), pages 1251-1279, September.
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    Cited by:

    1. Joe Tak-Yun Wong & Eddie Hui & William Seabrooke & John Raftery, 2005. "A study of the Hong Kong property market: housing price expectations," Construction Management and Economics, Taylor & Francis Journals, vol. 23(7), pages 757-765.
    2. Mark T. Spenc & James A. Thorson, 1998. "The Effect of Expertise on the Quality of Appraisal Services," Journal of Real Estate Research, American Real Estate Society, vol. 15(2), pages 205-215.
    3. Robyn S. Phillips, 1988. "Unravelling the Residential Rent-Value Puzzle: An Empirical Investigation," Urban Studies, Urban Studies Journal Limited, vol. 25(6), pages 487-496, December.
    4. Soldatos, Gerasimos T., 1990. "Information and Competitive Equilibria in the Housing Market," MPRA Paper 57629, University Library of Munich, Germany.

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