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Buying the American Dream: Housing Demand in the United States in the Late Nineteenth Century

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  • Michael R. Haines
  • Allen C. Goodman

Abstract

This paper examines homeownership and housing demand for a sample of approximately 6,800 urban, industrial workers in the United States for the period 1889/90. Using data from the Sixth and Seventh Annual Reports of the U.S. Commissioner of Labor, housing demand is viewed as a two part process: first, the "tenure choice" decision whether to own or rent; and, second, how much of either type of housing to purchase. Tenure choice and renter demand equations are estimated, using the concept of expected, rather than current income. Data limitations did not permit estimation of owner demand. The results indicate lower homeownership rates among American workers circa 1890 than later and significant effects on ownership of income, age of household head, region, industry, occupation, ethnicity, and family size and? composition. Rental prices and value/rent ratios had effects in the expected directions. Partial and full elasticities calculated for renter demand reveal downward biases if only current income is used to estimate housing demand. The results indicate that modern housing demand theory performs well with historical data.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Historical Working Papers with number 0005.

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Date of creation: Aug 1989
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Publication status: published as "Housing Demand in the United States in the Late Nineteenth Century: Evidence from the Commissioner of Labor Survey," Journal of Urban Economics, Vol 21, No.1 ( January,1992)
Handle: RePEc:nbr:nberhi:0005

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  1. Kelley, Allen C, 1976. " Savings, Demographic Change, and Economic Development," Economic Development and Cultural Change, University of Chicago Press, vol. 24(4), pages 683-93, July.
  2. Lee, Lung-Fei & Trost, Robert P., 1978. "Estimation of some limited dependent variable models with application to housing demand," Journal of Econometrics, Elsevier, vol. 8(3), pages 357-382, December.
  3. Michael R. Haines, 1989. "A State and Local Consumer Price Index for the United States in 1890," NBER Historical Working Papers 0002, National Bureau of Economic Research, Inc.
  4. Deaton, Angus S & Ruiz-Castillo, Javier & Thomas, Duncan, 1989. "The Influence of Household Composition on Household Expenditure Patterns: Theory and Spanish Evidence," Journal of Political Economy, University of Chicago Press, vol. 97(1), pages 179-200, February.
  5. Deaton, Angus S & Muellbauer, John, 1986. "On Measuring Child Costs: With Applications to Poor Countries," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 720-44, August.
  6. Mayo, Stephen K., 1981. "Theory and estimation in the economics of housing demand," Journal of Urban Economics, Elsevier, vol. 10(1), pages 95-116, July.
  7. Michael R. Haines, 1989. "Consumer Behavior and Immigrant Assimilation: A comparison of the United States, Britain and Germany, 1889/1890," NBER Historical Working Papers 0006, National Bureau of Economic Research, Inc.
  8. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-26, June.
  9. Goodman, Allen C. & Kawai, Masahiro, 1986. "Functional form, sample selection, and housing demand," Journal of Urban Economics, Elsevier, vol. 20(2), pages 155-167, September.
  10. Rosen, Harvey S., 1979. "Housing decisions and the U.S. income tax : An econometric analysis," Journal of Public Economics, Elsevier, vol. 11(1), pages 1-23, February.
  11. Pollak, Robert A & Wales, Terence J, 1981. "Demographic Variables in Demand Analysis," Econometrica, Econometric Society, vol. 49(6), pages 1533-51, November.
  12. Goodman, Allen C., 1988. "An econometric model of housing price, permanent income, tenure choice, and housing demand," Journal of Urban Economics, Elsevier, vol. 23(3), pages 327-353, May.
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Cited by:
  1. Michael R. Haines & Allen C. Goodman, 1991. "A Home of One's Own: Aging and Homeownership in the United States in the late Nineteenth and Early Twentieth Centuries," NBER Historical Working Papers 0021, National Bureau of Economic Research, Inc.

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