The Housing Market
This chapter investigates the nature of the housing market, as well as problems of segregation, discrimination, and affordability. Income differences possibly play a minor role, especially when accompanied by increased housing prices due to regulations and zoning ordinances. Affordability is a problem for people who do not want or cannot acquire housing of a certain quality. The quality of housing that was acceptable in 1940 or in 1960 is no longer acceptable today in the United States. Housing vouchers can bypass some of the administration costs. An efficient market has three components: a large number of buyers and sellers, homogeneous goods, and the distribution of perfect information about the quality of the good. Because of the inherent heterogeneity in the housing market, researchers use the nebulous concept of "housing services" as the "quantity." The hedonic technique quantifies the effect of various housing and neighborhood characteristics on house prices.