Abstract
This paper compares real rates of return to housing capital with returns to other forms of fixed reproducible capital. All data are from the national income and capital accounts and are gross of taxes and depreciation. Returns to housing capital have been consistently lower than those to other capital during the fifty-five year period for which data are available. Since 1950, the disparity between returns to housing and other capital has narrowed steadily and substantially. The paper presents speculations as to the reasons for the improvement in capital market efficiency.
Similar content being viewed by others
References
Brealey, Richard and Myers, Stewart. Principles of Corporate Finance. 2d ed. New York: McGraw-Hill, Inc. 1984.
Fullerton, Don and King, Merwyn, eds. The Taxation of Income from Capital: A Comparative Study of The U.S. Sweden and West Germany. Chicago: University of Chicago Press, 1984.
Hendershott, Patrick. Government Policies and the Allocation of Capital Between Residential and Industrial Uses. National Bureau of Economic Research Working Paper No. 1036. December 1982.
Linneman, Peter. “An Empirical Test of the Efficiency of the Housing Market.” Journal of Urban Economics 20 (September 1986), 140–154.
Mills, Edwin. “Has the United States Overinvested in Housing?” Journal of the American Real Estate and Urban Economics Association 15 (Spring 1987), 601–616.
U.S. Bureau of Economic Analysis. Fixed Reproducible Wealth in the United States 1925–1979. U.S. Department of Commerce, 1982.
—U.S. Bureau of Economic Analysis. National Income and Product Accounts 1929–1976. U.S. Department of Commerce, 1981.
—U.S. Bureau of Economic Analysis. National Income and Products Accounts Supplement 1977–1979. U.S. Department of Commerce, 1981.
—U.S. Bureau of Economic Analysis. Survey of Current Business, July 1984. U.S. Department of Commerce, 1984.
U.S. Census Bureau. Statistical Abstract of the United States, 1985. U.S. Government Printing Office, 1985.
Author information
Authors and Affiliations
Additional information
I am indebted to Robert Godrick and Daniel Siegel for comments on an earlier draft.
Rights and permissions
About this article
Cite this article
Mills, E.S. Are real estate markets becoming more efficient?. J Real Estate Finan Econ 1, 75–83 (1988). https://doi.org/10.1007/BF00207905
Issue Date:
DOI: https://doi.org/10.1007/BF00207905