Housing Demand and Community Choice: An Empirical Analysis

Abstract

Housing demand reflects the household's simultaneous choice of neighborhood, whether to won or rent the dwelling, and the quantity of housing services demanded. Existing literature emphasizes the final two factors, but overlooks the choice of community. This paper develops an econometric model that incorporates all three components, and then estimates this model using a sample of Tampa, Florida households. Incorporating community choice increases the price elasticity of demand and reduces the differential between white and comparable nonwhite households. The results are robust to the inclusion of permanent income and taxes.

JEL Classification: H70, R21