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The Determinants of Housing Demand

Eric A. Hanushek, John M. Quigley
Published Date: 
in J.V. Henderson (ed.)
Research in Urban Economics
Vol. II. (Greenwich, CT: JAI Press)
pp. 221-242

Housing consumption, particularly of the poor, has been the subject of active federal policy for the past half-century. During this period , a variety of subsidy mechanisms have been introduced to alter the housing choices of different groups in the population and to stimulate the construction of new dwelling units. While government subsidies have varied widely in form and have increased steadily (see Aaron, 1972; Brad bury and Downs, 1981), the key to understanding their welfare implications is knowledge of the basic parameters of housing demand and supply schedules. If policy makers had good estimates of the income and price elasticities of housing demand and the price elasticity of housing supply. they would be in a position to evaluate the welfare effects of most existing programs (cf. Murray, 1975) and to forecast the likely impact of many proposed housing subsidy programs (cf. Hanushek and Quigley, 1981).