The volatility of interest rates and the deregulation of the mortgage lending sector have meant that many homeowners also own mortgages at terms more favorable than current interest rates. This paper presents a model of residential mobility decisions and an empirical analysis that evaluates the importance of the ownership of these mortgages upon the mobility of homeowners. The results, based upon proportional and nonproportional hazard models, indicate that these effects are quite large. The empirical analysis distinguishes between different regulatory regimes that govern the assumption of existing mortgages, and indicates the implications of these findings for the pricing and valuation of mortgage-backed securities.

Several studies of housing price trends recommend combining statistical analysis to repeat sales of residential properties. Recently, price indices derived from these techniques have formed the basis for inferences about the "efficiency" of housing markets. This paper presents an improved methodology which combines inflation on repeat sales of unchanged properties, on repeat sales of improved properties, and on single sales, all in one joint estimation. Empirical evidence, based upon a rich sample of transactions on single family houses in a single neighborhood, indicates the clear advantages of the proposed methodology, at least in one typical application.

This paper explores the distinction between physical age and experience within the context of the human capital model of earnings determination. We extend the human capital model to distinguish the investment behavior of age-experience cohorts and to incorporate the effects of calendar time. Several alternative models are developed which are empirically tested based on a unique body of data (on Swedish engineering graduates) reflecting the earnings of cohorts with identical educational qualifications cross-classified by age and experience for a 10-year period. The results clearly indicate the necessity for distinguishing between experience and age in analyses of investment in human capital and are consistent with the interpretation that younger members of the same experience cohort are more efficient in producing human capital. The analysis also indicates the sensitivity of investment profiles to a priori restrictions on functional form and detects an inflection point in earnings increases consistent with Becker's original formulation of human investment theory.

This paper explores the distinction between physical age and experience within the context of the human capital model of earnings determination. We extend the human capital model to distinguish the investment behavior of age-experience cohorts and to incorporate the effects of calendar time. Several alternative models are developed which are empirically tested based on a unique body of data (on Swedish engineering graduates) reflecting the earnings of cohorts with identical educational qualifications cross-classified by age and experience for a 10-year period. The results clearly indicate the necessity for distinguishing between experience and age in analyses of investment in human capital and are consistent with the interpretation that younger members of the same experience cohort are more efficient in producing human capital. The analysis also indicates the sensitivity of investment profiles to a priori restrictions on functional form and detects an inflection point in earnings increases consistent with Becker's original formulation of human investment theory.

This paper analyzes the effect of regulations governing land use and residential construction upon the course of housing prices in California. We explore the linkage between regulation and housing prices using measures of housing prices estimated from the Public Use Microdata Samples (PUMS) of the 1990 and 2000 Census of Population and Housing, together with a detailed cross-sectional land use regulation and growth controls in California cities. We explore mechanisms by which regulatory stringency may affect housing outcomes for consumers. First, we assess whether housing is more expensive in more regulated cities. Second, we assess whether growth in the city-level housing stock over the period of a decade depends on the degree of land-use regulation at the start of the decade. Finally, we estimate the price elasticity of housing supply for regulated and relatively unregulated cities. Our results suggest that current regulations have powerful effects on housing outcomes.

A model of consumption of residential energy in dwellings is developed, distinguishing between attributes of housing that provide direct benefits to consumers and attributes that serve as inputs in the production of final goods, for example, the thermal comfort of dwellings. Empirical estimates are made of the mode, based upon the Annual Housing Survey, and the results are used to calculate the effects of changes in energy prices on the consumption of housing, residential energy, and other goods. The analysis suggests that the adjustment process within the housing market permits a great deal of substitution in response to energy price changes.

DISAGREEMENT about the responsiveness of housing demand to variations in relative prices persists, despite extensive empirical analyses. Two factors underlie this disagreement: the multidimensional character of housing makes direct observation of prices (as distinct from expenditures) impossible; and, the significant search, transactions, and moving costs associated with changing dwellings imply that, at any instant, a given household's consumption may deviate significantly from its utility maximizing level in a static equilibrium. While a number of ingenious attempts have been made to circumvent these problems, each is quite indirect and relies upon strong, and untestable, assumptions (cf. Mayo (1978)). This paper provides direct estimates of price elasticities, based upon an explicit model of housing consumption dynamics and utilizing the experimental manipulations of housing prices incorporated in the Housing Allowance Demand Experiments.1 While the data are limited to two years of longitudinal data and pertain only to low income renters, they nevertheless permit the direct estimation of this key parameter of housing demand. This analysis focuses on the price responsiveness of households, but clearly other changes in household circumstances (such as in income or family size) affect desired housing consumption. In fact, given the limited longitudinal data, information about other demand adjustments provides valuable insights into consumption dynamics. Price changes can be viewed as but one of a variety of exogenous influences on housing demand. A complete structural model of housing demand would consider the joint influence of household preferences, relocation costs, and prices on search and moving behavior and, conditional on this, their subsequent influence on housing consumption. However, both household preferences and relocation costs are generally unobserved, and estimation of such a complete model is simply beyond our current capabilities. We concentrate upon the more modest goal of modelling the reduced form relationship between housing consumption and housing stock disequilibrium (defined below). Consumption dynamics are represented by variants of a linearized stock adjustment process . This formulation is based on the simple observation that adjustments will generally be a monotonic function of the magnitude of disequilibrium in housing consumption. As indicated by past work (Hanushek and Quigley, 1979), this is both a convenient and powerful characterization of short run dynamics. Two basic formulations of consumption dynamics are considered. Let Htd represent the desired, or static equilibrium, quantity of housing demanded by a given household, and let Ht be the actual (observed) housing consumption at time t. In the simplest form, households are assumed, on average, to close the gap between desired and equilibrium housing consumption at a constant rate a, so that