International Real Estate Review

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We exploit the fact that cooperative dwellings carry different mutual debt to examine whether such debt is perfectly reflected in sales prices. When mutual debt in housing cooperatives is paid down through the rent, the differences in mutual debt result in rent differences. We use implicit information on expenditures of serving mutual debt contained in rent differences as an alternative method for studying efficiency in the cooperative housing market. Our results indicate that differences in mutual debt are perfectly reflected in prices, but that rent differences are less useful for examining housing market efficiency.