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Expectations and Urban Housing Prices

Author

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  • John F. McDonald

    (Department of Economics, University of Illinois, Chicago, Illinois)

Abstract

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.

Suggested Citation

  • John F. McDonald, 1985. "Expectations and Urban Housing Prices," Urban Studies, Urban Studies Journal Limited, vol. 22(6), pages 543-549, December.
    • Handle: RePEc:sae:urbstu:v:22:y:1985:i:6:p:543-549
    DOI: 10.1080/00420988520080901
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    References listed on IDEAS

    as
    1. James M. Poterba, 1983. "Tax Subsidies to Owner-occupied Housing: An Asset Market Approach," Working papers 339, Massachusetts Institute of Technology (MIT), Department of Economics.
    2. Ranney, Susan I, 1981. "The Future Price of Houses, Mortgage Market Conditions, and the Returns to Homeownership," American Economic Review, American Economic Association, vol. 71(3), pages 323-333, June.
    3. Kearl, J R, 1979. "Inflation, Mortgages, and Housing," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 1115-1138, October.
    4. Clapp, John M., 1980. "The elasticity of substitution for land: The effects of measurement errors," Journal of Urban Economics, Elsevier, vol. 8(2), pages 255-263, September.
    5. Bender, Bruce & Hwang, Hae-Shin, 1985. "Hedonic housing price indices and secondary employment centers," Journal of Urban Economics, Elsevier, vol. 17(1), pages 90-107, January.
    6. McDonald, John F., 1980. "The use of proxy variables in housing price analysis," Journal of Urban Economics, Elsevier, vol. 7(1), pages 75-83, January.
    7. Nerlove, Marc, 1983. "Expectations, Plans, and Realizations in Theory and Practice," Econometrica, Econometric Society, vol. 51(5), pages 1251-1279, September.
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    Cited by:

    1. Joe Tak-Yun Wong & Eddie Hui & William Seabrooke & John Raftery, 2005. "A study of the Hong Kong property market: housing price expectations," Construction Management and Economics, Taylor & Francis Journals, vol. 23(7), pages 757-765.
    2. Mark T. Spenc & James A. Thorson, 1998. "The Effect of Expertise on the Quality of Appraisal Services," Journal of Real Estate Research, American Real Estate Society, vol. 15(2), pages 205-215.
    3. Robyn S. Phillips, 1988. "Unravelling the Residential Rent-Value Puzzle: An Empirical Investigation," Urban Studies, Urban Studies Journal Limited, vol. 25(6), pages 487-496, December.
    4. Soldatos, Gerasimos T., 1990. "Information and Competitive Equilibria in the Housing Market," MPRA Paper 57629, University Library of Munich, Germany.

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