Explaining home improvement in the context of household investment in residential housing

Article Abstract:

Home improvement should be a major part of the analysis of housing investment. Traditional models have ignored this option and other household choices, such as to move to either a better or a worse neighborhood, or to do nothing at all. Relative to new housing expenditures, home improvement grew from 20% to 30% within the 1960-1980 period, showing a fundamental lack in conventional analyses. Traditional research may also suffer from selectivity bias. A theoretical framework is needed that takes into consideration the simultaneity of the decision of how much housing stock to hold, and how to adjust this level via the above options. The proposed model assumes a discontinuous and nonconvex budget constraint. The addition of maintenance as a determinant considerably improves its explanatory power. However, testing such a model for selection bias remains essential.

Economic aspects, Real estate investment, Real estate investments, Home improvement loans

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Estimating the implicit price of energy efficiency improvements in the residential housing market: a hedonic approach

Article Abstract:

Research examines whether the savings resulting from fuel-saving improvements such as insulation, passive solar energy, and thermal windows are being incorporated into housing values. This is of interest to the home owner because they want to make sure they can recover any fuel efficiency improvement expenses when they sell the house. Failure of the housing market to recognize fuel savings improvements may result in lower future investment in fuel saving improvements.

Thermal insulation, Insulation (Heat), Solar heating

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