Monthly rental price of a comparable home and the pricing of a two-bedroom home

Kristoffer Michael Warren

Abstract


Using single and multivariate OLS regressions, this study examines how the listing price of a two bedroom home is affected by the monthly rental price of a comparable home in the same city. We do this in order to provide some direction to young families looking to purchase their first home. Our data encompasses each state’s most populated city within the United States. This study reveals that as the monthly rental price of a comparable home (especially condos) increases, and/or as the price-to-rent ratio increases, so does the listing price of a two bedroom home. Therefore, a frugal home buyer should keep an eye on both comparable rental prices, and on the price-to-rent ratio within their city of interest. When rental prices drop, or when the price-to-rent ratio decreases, that is when a homebuyer should begin to consider the purchase of a two-bedroom home.


Keywords


Econometric modeling; Home ownership; Real estate pricing

Full Text:

PDF

References


Zillow (2016, May). Zillow data. Seattle, WA. Retrieved from Zillow database.

Humphries, S. (2010, September 21). A Better Price-Rent Ratio. Retrieved from http://www.zillow.com/research/a-better-price-rent-ratio-280/

Stock, J. H., Watson, M.W. (2015). Introduction to econometrics: Updated third edition. Essex, England: Pearson Education.

X. Wei, lecture, May 9, 2016.




DOI: http://dx.doi.org/10.18533/jefs.v5i04.257

Article Metrics

Metrics Loading ...

Metrics powered by PLOS ALM

Refbacks

  • There are currently no refbacks.
';



Copyright (c) 2017 Kristoffer Michael Warren

.............................................................................................................................

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.

.............................................................................................................................

If you find difficulties in submitting manuscript please forward your doc file to support@journalofeconomics.org. Our support team will assist you in submission process and other technical matters. Please note that documents uploaded by yourself are reviewed more quickly than replies by e-mail.

In order to get notifications on inbox please add  this domain journalofeconomics.org in your email safe list.

.............................................................

ISSN 2379-9463(Print)
ISSN 2379-9471(Online)

...........................................................