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User costs and bubbles in land markets

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  • Schreyer, Paul
Abstract
In asset markets with speculative behavior, the long-run equilibrium relationship between asset prices and the discounted flow of future rents may become invalid. We distinguish short-term user costs and longer-term user costs with variables that reflect fundamentals. We show how to work around the empirical problem of measuring speculative expectations about asset price changes and derive a simple user cost formula where the asset price change in the short-term relationship comes out as the long-run change in the overall price level.

Suggested Citation

  • Schreyer, Paul, 2009. "User costs and bubbles in land markets," Journal of Housing Economics, Elsevier, vol. 18(3), pages 267-272, September.
    • Handle: RePEc:eee:jhouse:v:18:y:2009:i:3:p:267-272
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    References listed on IDEAS

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    1. Diewert, W E, 1974. "Intertemporal Consumer Theory and the Demand for Durables," Econometrica, Econometric Society, vol. 42(3), pages 497-516, May.
    2. Garner, Thesia I. & Verbrugge, Randal, 2009. "Reconciling user costs and rental equivalence: Evidence from the US consumer expenditure survey," Journal of Housing Economics, Elsevier, vol. 18(3), pages 172-192, September.
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    Cited by:

    1. Garner, Thesia I. & Verbrugge, Randal, 2009. "Reconciling user costs and rental equivalence: Evidence from the US consumer expenditure survey," Journal of Housing Economics, Elsevier, vol. 18(3), pages 172-192, September.
    2. W. Erwin Diewert & Kevin J. Fox, 2016. "Sunk costs and the measurement of commercial property depreciation," Canadian Journal of Economics, Canadian Economics Association, vol. 49(4), pages 1340-1366, November.
    3. Garner, Thesia I. & Verbrugge, Randal, 2009. "Reconciling user costs and rental equivalence: Evidence from the US consumer expenditure survey," Journal of Housing Economics, Elsevier, vol. 18(3), pages 172-192, September.
    4. Diewert, Erwin & Shimizu, Chihiro, 2013. "A Conceptual Framework for Commercial Property Price Indexes," Economics working papers erwin_diewert-2013-44, Vancouver School of Economics, revised 09 Oct 2013.
    5. Tilak Abeysinghe & Jiaying Gu, 2016. "Estimating fundamental and affordable housing price trends: a study based on Singapore," Applied Economics, Taylor & Francis Journals, vol. 48(49), pages 4783-4798, October.
    6. Diewert, W. Erwin & Nakamura, Alice O. & Nakamura, Leonard I., 2009. "The housing bubble and a new approach to accounting for housing in a CPI," Journal of Housing Economics, Elsevier, vol. 18(3), pages 156-171, September.

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