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Homeownership Returns, Tenure Choice and Inflation
Author(s) -
Peiser Richard B.,
Smith Lawrence B.
Publication year - 1985
Publication title -
real estate economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.064
H-Index - 61
eISSN - 1540-6229
pISSN - 1080-8620
DOI - 10.1111/1540-6229.00358
Subject(s) - economics , capitalization , inflation (cosmology) , capitalization rate , real interest rate , interest rate , monetary economics , inflation rate , labour economics , econometrics , real estate , finance , philosophy , linguistics , real estate investment trust , physics , theoretical physics
This paper empirically investigates the impact of inflation on homeownership returns and tenure choice when the assumptions underlying the user cost of housing are modified to reflect separately the effects of unanticipated and anticipated inflation. The analysis demonstrates that when the user cost model is specified to reflect the impact of anticipated inflation on house prices, the mortgage interest rate and the capitalization rate, the returns to homeownership are lower than determined by previous user cost studies and are consistent with a reasonably efficient market.