Dynamics and Distribution of Real Estate Prices

Real estate shows interesting features other asset classes can hardly provide: it simultaneously offers both features of investment and of consumption. This book studies different aspects in which these two features interrelate to each other either in a temporal or spatial manner. In the first part Thomas Maier investigates how the location of real estate and the corresponding level of traffic affect housing prices and which incentives are implicitly created in such an environment in order to increase allocational efficiency. In the second part price volatility in rental real estate markets is studied by looking at the practical selection and attraction decisions landlords and tenants have to take when acting in this market. In the final part Thomas Maier applies realistic utility and income distributions to the credit based OLG model of Ortalo-Magne and Rady. The role of forward-looking price expectations is central to this study. Important results about the role of first time buyers, the interrelation of property prices of different sizes and intergenerational wealth and property distributions are obtained.