The Economic Theory of Housing Demand: A Critical Review
AbstractDespite thirty years of modeling housing markets, housing analysts still have difficulty accurately assessing housing demand. This article reviews the current state of the art in economic modeling of housing demand determinants and suggests a future direction for further research. The fully developed economic theory of the housing market for analyzing housing decisions is the neoclassical consumer theory of housing demand. The review of the various modifications that have been made to better operationalize the imperfect and noncompetitive features of the housing market show that these modifications have been introduced in several partial models. These models include tenure choice models, search models, mobility models, and housing trait models. There is currently no single model that incorporates all of the modifications attempted in these partial models. In fact, it may be impossible to operationalize and incorporate all of the modifications of the neoclassical model into a single model. Therefore, the most feasible and conceptually correct research strategy to advance our understanding of housing consumption decisions is to analyze the impact of demographic and social processes on housing consumption decisions. There is a need to research how to include demographic and sociological constructs that capture the attitudes, preferences, and perceptions of the consumer into the classical economic model of housing demand.
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Bibliographic InfoArticle provided by American Real Estate Society in its journal Journal of Real Estate Research.
Volume (Year): 6 (1991)
Issue (Month): 3 ()
Contact details of provider:
Postal: American Real Estate Society Clemson University School of Business & Behavioral Science Department of Finance 401 Sirrine Hall Clemson, SC 29634-1323
Web page: http://www.aresnet.org/
Postal: Diane Quarles American Real Estate Society Manager of Member Services Clemson University Box 341323 Clemson, SC 29634-1323
Find related papers by JEL classification:
- L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services
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