EconPapers    
Economics at your fingertips  
 

Why Are Housing Demand Curves Upward Sloping?

Martijn Dröes ()

ERES from European Real Estate Society (ERES)

Abstract: Using a microeconomic model of housing demand, we show that the effect of price increases on demand depends on whether a household trades up or down the property ladder. For a household that trades up the cost effect of a price increase typically outweighs the capital gains effect of such an increase. For a household that trades down the reverse might hold which can lead – in contrast to the standard model of consumer demand – to an upward sloping housing demand curve. This result is in line with the idea that housing is both a consumption and investment good and occurs even in the absence of down-payment constraints and nominal loss aversion. Nested logit regressions of residential mobility on housing capital gains support these findings.

Keywords: decomposition; housing capital gains; Housing demand; residential mobility; upward sloping demand curves (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ure
Date: 2018-01-01
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://eres.architexturez.net/doc/oai-eres-id-eres2018-267 (text/html)
https://eres.architexturez.net/system/files/P_20180131221820_171.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:arz:wpaper:eres2018_267

Access Statistics for this paper

More papers in ERES from European Real Estate Society (ERES) Contact information at EDIRC.
Bibliographic data for series maintained by Architexturez Imprints ().

 
Page updated 2020-01-13
Handle: RePEc:arz:wpaper:eres2018_267