THE DEMAND FOR HOUSING - THEORETICAL CONSIDERATIONS

This paper focuses on housing’s dual roles of consumption good and investment asset, and studies its intertemporal demand in a multi-period model with uncertainty. While the existence of a competitive equilibrium is proved, the emphasis is on the derivation of comparative statics properties. The results admit an upward sloping own demand curve for housing, which is consistent with observation in some housing markets. Additional restrictions, which ensure a downward sloping housing demand function, are then developed. These restrictions indicate that the assumptions typically employed in the literature on housing demand are unnecessarily restrictive. Journal of Economic Literature Classification Numbers: R21, D11, D91. © 1993 by Academic Press, Inc.