Relationship between Residential Rents and House Values: Explaining Intertemporal and Cross-Sectional Variation, 1974-1979. Summary of Findings

摘要

The empirical results suggest that inter-temporal and inter-metropolitan variation in housing capitalization rates over the 1974-1979 period are generally consistent with capital asset pricing theory, although all elasticities are less than one or negative one. Observed differences in housing capitalization rates between individual metropolitan areas can be explained in terms of housing market conditions affecting expectations about future rents and housing prices, differences in property tax rates and utility costs, the tightness of the housing market, and the presence or absence of rent control.