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Modeling returns to owner-occupied single-family residences

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Abstract

This paper expands previous models of the returns to owner-occupied single-family residences by modelling returns to a specific property of an individual homeowner instead of determining an average market return based on appraised values. Included in the model are transaction costs, degree of leverage, level of price appreciation, the implied rental cost in ownership, tax bracket, and duration of home ownership. Simulation results suggests that the level and timing of transaction costs are important to homeowners and rates of return to owner-occupied single-family residences increase to a point in time and thereafter decline.

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Authors and Affiliations

  1. School of Business, Haward University, 20059, Washington, DC

    Charles M. Ermer (Associate Professon) & Steven M. Cassidy (Associate Professon)

  2. College of Business and Economics, University of Nevada, 89154-6008, Las Vegas, NY

    Michael J. Sullivan (Assistant Professon)

Authors
  1. Charles M. Ermer
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  2. Steven M. Cassidy
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  3. Michael J. Sullivan
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Ermer, C.M., Cassidy, S.M. & Sullivan, M.J. Modeling returns to owner-occupied single-family residences. J Econ Finan 18, 205–217 (1994). https://doi.org/10.1007/BF02920523

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  • DOI: https://doi.org/10.1007/BF02920523

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