Analysis of Consumers’ Perceptions of Buying Conditions for Houses

Analysis of Consumers’ Perceptions of Buying Conditions for Houses This paper examines the determinants of consumers’ buying attitudes for houses from January 1984 through June 2005. Data on buying attitudes are from responses to the Surveys of Consumer Attitudes conducted by the Survey Research Center, University of Michigan. The determinants considered include current and expected interest rates, wealth, expected real disposable income, expected change in financial status and house prices. The empirical estimates show that a long-run relationship exists between buying attitudes for houses and each of the above variables. Each of these determinants also Granger cause buying perceptions. Generalized impulse responses show that shocks to each of the above variables have a predictable and permanent impact on buying attitudes. Furthermore, generalized variance decompositions suggest that both current and expected interest rates explain a large proportion of the variation in consumers’ perceptions towards buying houses. Since consumers’ attitudes towards buying houses are likely to be translated into actual purchases, this study shows that in order of importance, interest rates—both current and future—have the maximum impact on decisions to purchase houses followed by expectations of real disposable income. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Journal of Real Estate Finance and Economics Springer Journals

Analysis of Consumers’ Perceptions of Buying Conditions for Houses

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Publisher
Springer Journals
Copyright
Copyright © 2007 by Springer Science+Business Media, LLC
Subject
Economics; Regional/Spatial Science; Financial Services
ISSN
0895-5638
eISSN
1573-045X
D.O.I.
10.1007/s11146-007-9084-0
Publisher site
See Article on Publisher Site

Abstract

This paper examines the determinants of consumers’ buying attitudes for houses from January 1984 through June 2005. Data on buying attitudes are from responses to the Surveys of Consumer Attitudes conducted by the Survey Research Center, University of Michigan. The determinants considered include current and expected interest rates, wealth, expected real disposable income, expected change in financial status and house prices. The empirical estimates show that a long-run relationship exists between buying attitudes for houses and each of the above variables. Each of these determinants also Granger cause buying perceptions. Generalized impulse responses show that shocks to each of the above variables have a predictable and permanent impact on buying attitudes. Furthermore, generalized variance decompositions suggest that both current and expected interest rates explain a large proportion of the variation in consumers’ perceptions towards buying houses. Since consumers’ attitudes towards buying houses are likely to be translated into actual purchases, this study shows that in order of importance, interest rates—both current and future—have the maximum impact on decisions to purchase houses followed by expectations of real disposable income.

Journal

The Journal of Real Estate Finance and EconomicsSpringer Journals

Published: Sep 19, 2007

References

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