An Extended Measure Of The User Costs Of Housing - New Evidence From The U.S.

Abstract

This paper is based on a traditional neoclassical approach to housing investment and our previous work carried out for Germany. In this study we check the relevance if the definition for the user costs of housing should be extended by an additional term which mirrors the credit constraints a household would be faced with for the U.S. economy. This extension term consists of the inflation gap between consumer and house price inflation multiplied with an average loan-to-value ratio and the real house prices. The empirical relevance of our finding is confirmed by a VECM using U.S. data. A time series for the user costs of housing in the U.S. is calculated.