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Income Elasticities of Demand for Rental Housing in Small Cities

Author

Listed:
  • Michael A. Stegman

    (University of North Carolina)

  • Howard J. Sumka

    (U.S. Department of Housing and Urban Development)

Abstract

The housing consumption of renters in small cities is examined using a constant elasticity model estimated from cross-sectional data for a sample of 500 households. Permanent income is estimated using a cohort averaging technique which adjusts for differential expectations of future incomes. The demand for housing is found to be highly inelastic with respect to income, particularly for large, poor, or black households. The results suggest that for a housing allowance to be an effective means of increasing housing consumption in small cities, it may have to include more restrictive earmarking requirements than in metropolitan markets.

Suggested Citation

  • Michael A. Stegman & Howard J. Sumka, 1978. "Income Elasticities of Demand for Rental Housing in Small Cities," Urban Studies, Urban Studies Journal Limited, vol. 15(1), pages 51-61, February.
    • Handle: RePEc:sae:urbstu:v:15:y:1978:i:1:p:51-61
    DOI: 10.1080/713702305
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    References listed on IDEAS

    as
    1. de Leeuw, Frank, 1971. "The Demand for Housing: A Review of Cross-Section Evidence," The Review of Economics and Statistics, MIT Press, vol. 53(1), pages 1-10, February.
    2. Carliner, Geoffrey, 1973. "Income Elasticity of Housing Demand," The Review of Economics and Statistics, MIT Press, vol. 55(4), pages 528-532, November.
    3. Polinsky, A Mitchell, 1977. "The Demand for Housing: A Study in Specification and Grouping," Econometrica, Econometric Society, vol. 45(2), pages 447-461, March.
    4. Ramanathan, R, 1971. "Measuring the Permanent Income of a Household: An Experiment in Methodology," Journal of Political Economy, University of Chicago Press, vol. 79(1), pages 177-185, Jan.-Feb..
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