Non‐Mortgage Factors Affecting Housing Sales and Construction: A Case Study of Transactions in 3 Counties of Southeastern Wisconsin, 1974‐78

Abdullah Zarinnia

American Journal of Economics and Sociology, 1983, vol. 42, issue 1, 29-37

Abstract: Abstract. The surge in the sale and construction of housing in three counties of southeastern Wisconsin between 1974 and 1978 could not be readily explained in terms of the credit cost and credit availability theory, the expectation theory or affordability. A questionnaire was sent to a random sample of home buyers. Their responses showed that the main motivating factors were investment purpose, the desire for a bigger and better home, and anticipation of higher home prices. Data supported their responses as the rate of return on investment in housing (equity appreciation) was significantly higher than both the mortgage interest rate and the return on alternative investments. Although median family income lagged behind home prices, it kept pace with ownership costs. Thus, given the demand, the critical factor was affordability.

Date: 1983
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