ABSTRACT
Cities do not change dramatically every day, except perhaps as a result of general catastrophes like earthquakes, flood or war, or because of localized blockbusting as a result of urban renewal projects or other kinds of “creative destruction” interventions. Most cities can therefore be viewed as an ensemble of many highly durable, to a large extent indivisible, and expensive building units owned by a large number of individuals and firms. Moreover, the majority of those residing in these buildings do not change residence often. Even in a lively developing-country city like Rio de Janeiro, buildings tend to last over 50 years and people tend to remain in a dwelling for more than eight years on average.1 Even in a so-called “boom” year no more than 5 per cent of new housing will be added to the existing stock. As a result about two-thirds of transactions in the Rio housing market refer to second-hand units.2
