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Do Values of Existing Home Sales Reflect Property Values?

Author

Listed:
  • Gregory W. Huffman

    (Department of Economics, Vanderbilt University)

Abstract

In many locales, the average price of existing home sales is used as an of indicator home prices. This information is then used to establish the value of the property for tax purposes. A simple example is presented here to show that this approach can be very misleading. In this example, the average price of existing home sales is always rising at the rate of growth of the economy, and yet the price each home remains constant.

Suggested Citation

  • Gregory W. Huffman, 2001. "Do Values of Existing Home Sales Reflect Property Values?," Vanderbilt University Department of Economics Working Papers 0122, Vanderbilt University Department of Economics.
  • Handle: RePEc:van:wpaper:0122
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    More about this item

    Keywords

    Asset pricing; home prices; transaction volume;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies

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