The Urban Homeowner's Residential Location Decision in an Asset-Pricing Context |
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Authors: | Kenneth Wieand |
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Institution: | University of South Florida, Tampa, FL 33620-5500 or . |
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Abstract: | Homeowners determine the maximum site bid price for homeowner housing within a two-period expected-utility model. The bid price is a function of the expected cash flows to sites, the quantity of housing consumed and a relocation option. The bid price is derived in the general case as a function of the homeowner's portfolio risk, including the total risk to the site, and the market price of risk. The bid price is derived under a spatial measure as a function of distance from an arbitrary location. Specific results are obtained when the household experiences log-linear utility for housing and other goods. Use of the market price of risk simplifies analytical solutions to the bid price equation. |
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