OPTIMAL HOUSING COST ESTIMATES FOR 177 U.S. METROPOLITAN AREAS

Authors


  • The author would like to thank Stela Dhami and Nhu Nguyen for careful research assistance. He is also grateful to Donna E. Leicach, at the Integrated Public Use Microdata Series project at the Minnesota Population Center, for assistance with data and to Peter B. Kahn, at the Department of Housing and Urban Development, for help understanding the calculation of Fair Market Rents. He also thanks JRS co-editor Mark Partridge for suggesting the fourth housing cost measure and an anonymous reviewer for suggesting the fifth.

Abstract

ABSTRACT This research tests the ability of six metropolitan-level measures of housing costs to predict a benchmark housing cost measure based on Aten's area price level index. The first four measures are calculated with U.S. Census Data, the fifth is based on HUD Fair Market Rents, and the sixth is the housing portion of the ACCRA Index. In 25 large metropolitan areas, the fourth measure predicts 86 percent of the variation in the benchmark index in 1990 and 85 percent in 2000. The fifth measure performs nearly as well. The paper concludes both are promising measures of living costs.

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