Transaction costs, capital-gains taxes, and housing demand
Article Abstract:
Transaction costs, including capital gains taxes, are analyzed for their effect on home ownership decisions and housing demand. Transaction costs related to home purchases can be avoided by maintaining the same home in a family for multiple generations, so the research is structured to account for overlapping generation models. Transaction costs considered include fixed costs and costs that vary by size of house or house value. The research reveals that (1) high transaction costs encourage people to maintain the same house, rather than transact a sale and repurchase, and (2) housing demand increases as home-owners continue to hold the same houses, a phenomenon labeled 'lock-in.' The research suggests that increasing tax rates will discourage housing demand by low tax rate households and encourage housing demand by higher tax rate households.
Publication Name: Journal of Urban Economics
Subject: Government
ISSN: 0094-1190
Year: 1986
User Contributions:
Comment about this article or add new information about this topic:
The demand for housing in Sweden: equilibrium choice of tenure and type of dwelling
Article Abstract:
Housing demand and choice of tenure were investigated by studying owner-occupied, one-family houses, rental apartments, and owner-occupied apartments. Previous studies on this subject have compared only the first two modes of tenure, which resulted in confusion between the choice of tenure and the choice of dwelling. This study overcomes the weaknesses of previous studies by studying three modes of tenure using data from a household survey in Sweden. The results confirmed the price and income inelasticity of the conditional demand for owner-occupied housing. Owner-occupied apartments should be investigated as a separate alternative in research, and only the data from households likely to be in equilibrium should be used to estimate static equilibrium models.
Publication Name: Journal of Urban Economics
Subject: Government
ISSN: 0094-1190
Year: 1991
User Contributions:
Comment about this article or add new information about this topic:
A microsimulation model of Swedish housing demand
Article Abstract:
A micro-simulation model is presented for Swedish housing demand, with analysis of the effects of tax schedule changes. Sweden's income tax statutes treat renters and homeowners in an asymmetric fashion, so most tax law changes will alter housing demand and tenure choice. The micro-simulation model developed here generates consistent mean estimates and total housing demand variance, also showing that commonly used techniques such as analytic elasticities can result in very misleading predictions. The model can be utilized to simulate any tax system change.
Publication Name: Journal of Urban Economics
Subject: Government
ISSN: 0094-1190
Year: 1988
User Contributions:
Comment about this article or add new information about this topic:
- Abstracts: Labor and capital income taxation, fiscal competition, and the distribution of wealth. Why do governments subsidise investment and not employment?
- Abstracts: A predictive index for the flypaper effect. Capitalization of capital gains taxes: evidence from stock price reactions to the 1997 rate reduction
- Abstracts: The distributional effects of local labor demand and industrial mix: estimates using individual panel data. Neighborhood revitalization's effects on tenants and the benefit-cost analysis of government neighborhood programs
- Abstracts: A study of the impacts of zoning on housing values over time. The price elasticity of the supply of single-family detached urban housing