Housing appreciation (depreciation) and owners’ welfare |
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| Authors: | Fu-Chuan Lai John F McDonald David F Merriman |
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| Institution: | 1. Urology Section, Surgery Department, Veterans Administration Caribbean Healthcare System and University of Puerto Rico Medical Sciences Campus, San Juan, Puerto Rico;2. Department of Biostatistics and Bioinformatics, Duke University School of Medicine, Durham, NC;3. Urology Section, Veterans Affairs Medical Center Durham, Durham, NC;4. Department of Biology and Cancer Research Program, Julius L. Chambers Biomedical/Biotechnology Research Institute, North Carolina Central University Durham, NC;5. Department of Biological Sciences, Center for Human Health and the Environment, North Carolina State University, Raleigh, NC;6. Division of Urology, Department of Surgery, Samuel Oschin Comprehensive Cancer Institute, Cedars-Sinai Medical Center, Los Angeles, CA |
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| Abstract: | This paper extends Frank’s (2006) very simple model to analyze the welfare effects of appreciation and depreciation in a world with borrowing, property taxes, and moving costs. It is shown that appreciation can make homeowners worse off but that even when there is a property tax depreciation can not make homeowners who intend to stay in their house worse off. Our model provides a simple framework that can be used discuss the rationale for alternative policies to aid homeowners during periods of both appreciation and depreciation. |
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