Housing Demand in the Short Run: An Analysis of Polytomous Choice

In this paper the author presents a model of household choice among types of residential housing that incorporates intramet­ ropolitan variations in housing prices arising from variations in work site location. Under suitable assumptions, the prices that households face in choosing among alternative types of residential housing are deduced. ¶ The empirical analysis suggests that consumers are re­ sponsive to the systematic variation in these prices in their choices among housing types in a metropolitan area. A model relating house­ hold choices among some 18 types of residential housing to intrarnet­ ropolitan price variation is estimated by maximum likelihood methods using conditional logit analysis. The results of the analysis, which is conducted separately for some O stratifications of households by income and family size, provide strong evidence of the importance of these intrametropolitan variations in relative prices in motivating choice among alternative types of residential housing. NOTE: A previous version of this paper was presented at the winter meetings of the Econometric Societ New York, December 1973. I am grateful to Bill Apgar. Jim Ohis, and William Weaton for helpful criticise of an earlier draft, and to Wallace Campbell, Walter Fisher, and Philip Klutznick of the Board reading committee for their comments on the final version of the paper.