A probability model of the housing market based on quasi-classical considerations

This paper sets out a simple probability model for explaining locational patterns and trip-making in urban housing markets. As a prerequisite to formulating the model, the classical theory of residential location based on consumer theory is briefly outlined, and the difficulties of using such theory in an operational context are discussed. A more flexible approach, based on certain classical considerations involving rents, travel costs, and incomes is introduced and a model of the housing market is formulated using a probability-maximizing method. The model is then applied to residential location in the Reading sub-region, and tests of the model reveal that its performance in statistical terms is reasonable. In conclusion, certain possibilities for embedding the model into a more comprehensive modelling framework are explored.