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.
Get full access to this article
View all access options for this article.
References
1.
Bednarz, R. (1975). The Effect of Air Pollution on Property Value in Chicago. The University of Chicago, Dept. of Geography , Research Paper No. 166.
2.
Bender, B. and Hwang, H. (1985). Hedonic Housing Price Indices and Secondary Employment Centers. Journal of Urban Economics, Vol. 17: 90-107.
3.
Berry, B.J.L. and Bednarz, R. (1979). The Disbenefits of Neighborhood and Environment to Urban Property. In The Economics of Neighborhood. D. Segal (ed.), New York: Academic Press.
4.
Clapp, J. (1980). The Elasticity of Substitution for Land. The Effects of Measurement Errors. Journal of Urban Economics, Vol. 8: 255-263.
5.
Council Of Economic Advisors (1984). Economic Report of the President. Washington, D.C.: US Government Printing Office.
6.
Kearl, J. (1979). Inflation, Mortgages and Housing. JournalPolitical Economy, Vol. 87: 1115-1138.
7.
McDonald, J. (1979). Economic Analysis of an Urban Housing Market. New York: Academic Press.
8.
McDonald, J. (1980). The Use of Proxy Variables in Housing Price Analysis . Journal of Urban Economics, Vol. 7: 75-83.
9.
Muth, J. (1961). Rational Expectations and the Theory of Price Movements. Econometrica, Vol. 29: 315-335.
10.
Nerlove, M. (1983). Expectations, Plans and Realizations in Theory and Practice. Econometrica, Vol. 51: 1251-1280.
11.
Poterba, J. (1983). Tax Subsidies to Owner-occupied Housing: An Asset Market Approach. National Bureau of Economic Research Working Paper No. 339.
12.
Ranney, S. (1981). The Future Price of Houses, Mortgage Market Conditions, and the Returns to Homeownership. American Economic Review , Vol. 71: 323-333.
13.
Schnare, A. and MacRae, C. (1978). The Dynamics of Neighborhood Change. Urban Studies, Vol. 15: 327-331.
