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The Housing Stock, Housing Prices, and User Costs: the Roles of Location, Structure, and Unobserved Quality

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  • Jonathan Halket

    (University of Essex, Texas A&M University System)

  • Lars Nesheim

    (UCL - University College of London [London])

  • Florian Oswald

    (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique)

Abstract

Which housing characteristics are important for understanding homeownership rates? How are housing characteristics priced in rental and owner-occupied markets? What can answers to these questions tell us about economic theories of homeownership? Using the English Housing Survey, we estimate a selection model of property allocations to the owner-occupied and rental sectors. Structural characteristics and unobserved quality are important for selection. Location is not. Accounting for selection is important for rent-to-price ratio estimates and explains some puzzling correlations between rent-to-price ratios and homeownership rates. These patterns are consistent with, among others, hypotheses of rental market contracting frictions related to housing maintenance.

Suggested Citation

  • Jonathan Halket & Lars Nesheim & Florian Oswald, 2020. "The Housing Stock, Housing Prices, and User Costs: the Roles of Location, Structure, and Unobserved Quality," SciencePo Working papers Main hal-03799462, HAL.
    • Handle: RePEc:hal:spmain:hal-03799462
    DOI: 10.1111/iere.12475
    Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-03799462
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    3. Levy, Daniel & Snir, Avichai, 2018. "Here Lives a Wealthy Man: Price Rigidity and Predictability in Luxury Housing Markets," EconStor Preprints 175843, ZBW - Leibniz Information Centre for Economics.
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    6. Aaron Hedlund, 2018. "Down Payments and the Homeownership Dream: Not Such a Barrier After All?," Working Papers 1806, Department of Economics, University of Missouri.
    7. Allen Head & Huw Lloyd‐Ellis & Derek Stacey, 2023. "Heterogeneity, Frictional Assignment, And Home‐Ownership," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 64(3), pages 1265-1308, August.
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    9. Vera Baye & Valeriya Dinger, 2023. "Investment incentives of rent controls and gentrification – Evidence from German micro data," IEER Working Papers 122, Institute of Empirical Economic Research, Osnabrueck University.
    10. Carlos Garriga & Aaron Hedlund, 2019. "Crises in the Housing Market: Causes, Consequences, and Policy Lessons," Working Papers 2019-33, Federal Reserve Bank of St. Louis.
    11. Brian Adams & Randal Verbrugge, 2020. "Location, Location, Structure Type: Rent Divergence within Neighborhoods," Economic Working Papers 533, Bureau of Labor Statistics.
    12. Ahlfeldt, Gabriel M. & Heblich, Stephan & Seidel, Tobias, 2023. "Micro-geographic property price and rent indices," Regional Science and Urban Economics, Elsevier, vol. 98(C).
    13. Adam M. Guren & Arvind Krishnamurthy & Timothy J. Mcquade, 2021. "Mortgage Design in an Equilibrium Model of the Housing Market," Journal of Finance, American Finance Association, vol. 76(1), pages 113-168, February.
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