ABSTRACT

Using the most recent American Housing Survey data, this study empirically investigates the income elasticity of rural home improvement demand and factors that drive the variation of the investment. It finds that for every 1 percent increase in rural household income, it leads to an average of 0.37 percent increase in home improvement expenditure. Beyond the basic intuition that higher property value and more structure are usually associated with higher home improvement investment, the study also identifies other policy relevant determinants of home improvement investment: access to credit, mortgage rate, homeownership experience, education, marital status, neighborhood effects, environment amenities and home-improvement-related housing policies.