Inflation and the Benefits from Owner-Occupied Housing

34 Pages Posted: 28 May 2004 Last revised: 21 Jul 2021

See all articles by Patric H. Hendershott

Patric H. Hendershott

University of Aberdeen - Centre for Property Research; National Bureau of Economic Research (NBER)

Sheng-Cheng Hu

Academia Sinica - Institute of Economics; National Bureau of Economic Research (NBER)

Date Written: August 1979

Abstract

This paper examines the effects of inflation on the allocation of resources between residential and nonresidential uses and the productivity of capital in the U.S. We begin by calculating the realized rates of return on homeowner equity and the contributions of fixed-rate mortgages and differences in relative inflation rates to extraordinary earned real returns. The paper then focuses on the implications of the extraordinary real returns on residential capital for stock prices and on the demand for owner-occupied housing. Proposals for achieving efficient allocation of capital between residential and nonresidential uses are also considered.

Suggested Citation

Hendershott, Patric H. and Hu, Sheng-Cheng, Inflation and the Benefits from Owner-Occupied Housing (August 1979). Available at SSRN: https://ssrn.com/abstract=261236

Patric H. Hendershott (Contact Author)

University of Aberdeen - Centre for Property Research ( email )

Aberdeen AB24 2UF
Scotland

National Bureau of Economic Research (NBER) ( email )

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Cambridge, MA 02138
United States

Sheng-Cheng Hu

Academia Sinica - Institute of Economics ( email )

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Nankang
Taipei, 11529
Taiwan
(886) 2-2782-2791-x624 (Phone)
(886) 2872-2019 (Fax)

National Bureau of Economic Research (NBER)

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United States

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