Abstract
Due to moving and transactions costs, most housing buyers do not routinely move in response to small changes in income or housing price. In this paper, the “own–rent,” “move–stay,” and length-of-stay decisions are modeled as multi-period optimization in the presence of transactions costs. The empirical section uses the American Housing Survey to provide a unique 12-year panel of household stayers for the Detroit metropolitan area. Results indicate that income and value–rent measures in different years have separable and significant impacts on housing demand. Estimated full income elasticities are between 0.30 and 0.35.
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