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Changing Rates of Return on Rental Property and Condominium Conversions

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  • Theodore M. Crone

    (Federal Reserve Bank of Philadelphia)

Abstract

In the 1970s about 350,000 housing units in multi-family structures in the US were converted to a condominium or co-operative form of ownership. This paper shows how changes in both rents and housing prices influence the expected rate of return on rental property and therefore the probability of conversion. A minimum logit chi-square model was applied to data from 34 metropolitan areas to estimate the effects of these changes. The evidence suggests that changes in housing prices had a greater effect on conversions than changes in the expected net return on rental property.

Suggested Citation

  • Theodore M. Crone, 1988. "Changing Rates of Return on Rental Property and Condominium Conversions," Urban Studies, Urban Studies Journal Limited, vol. 25(1), pages 34-42, February.
    • Handle: RePEc:sae:urbstu:v:25:y:1988:i:1:p:34-42
    DOI: 10.1080/00420988820080031
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    References listed on IDEAS

    as
    1. Swan, Craig, 1984. "A model of rental and owner-occupied housing," Journal of Urban Economics, Elsevier, vol. 16(3), pages 297-316, November.
    2. Litzenberger, Robert H & Sosin, Howard B, 1978. "Taxation and the Incidence of Homeownership across Income Groups," Journal of Finance, American Finance Association, vol. 33(3), pages 947-961, June.
    3. Rosen, Harvey S & Rosen, Kenneth T & Holtz-Eakin, Douglas, 1984. "Housing Tenure, Uncertainty, and Taxation," The Review of Economics and Statistics, MIT Press, vol. 66(3), pages 405-416, August.
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