Housing appreciation (depreciation) and owners' welfare

Fu-Chuan Lai, John McDonald and David Merriman ()

Journal of Housing Economics, 2010, vol. 19, issue 1, 66-73

Abstract: This paper extends Frank's (2006) very simple model to analyze the welfare effects of appreciation and depreciation in a world with borrowing, property taxes, and moving costs. It is shown that appreciation can make homeowners worse off but that even when there is a property tax depreciation can not make homeowners who intend to stay in their house worse off. Our model provides a simple framework that can be used discuss the rationale for alternative policies to aid homeowners during periods of both appreciation and depreciation.

Keywords: Housing; Property; taxes; Moving; costs (search for similar items in EconPapers)
Date: 2010
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