Estimating equilibrium housing demand for "stayers"

This study models demand by owner-occupied housing "stayers." Most consumers do not move routinely in response to small changes in income or housing price, so the "own-rent" and "move-stay" decisions are modeled as multiperiod optimization in the presence of transaction costs. The empirical section uses the "American Housing Survey" to provide a panel of household stayers for a metropolitan area. Results indicate that income and value-rent measures in different years have separable and significant impacts on housing demand. Estimated conditional income elasticities are between 0.40 and 0.45. (C) 2001 Elsevier Science.