Estimating User Costs and Rates of Return for Single-Family Residential Real Estate
This paper discusses the costs of home ownership and their potential impact on real estate returns. The simulations show that user costs can easily exceed the total of capital gains and imputed or actual rents based upon historical long-term real estate mortgage interest and appreciation rates. To o...
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| Veröffentlicht in: | Journal of real estate practice and education 2005-01, Vol.8 (1), p.1-24 |
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| container_title | Journal of real estate practice and education |
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| creator | DeRieux, Walter R. Benjamin, John D. Miller, Norman G. |
| description | This paper discusses the costs of home ownership and their potential impact on real estate returns. The simulations show that user costs can easily exceed the total of capital gains and imputed or actual rents based upon historical long-term real estate mortgage interest and appreciation rates. To offset high user costs and potential lower rates of return on residential equity investments, the purchase price becomes critical. Furthermore, holding periods are important. If there is less than the average 7-year holding period, the higher relative transactions costs result in much higher user costs. In addition, the simulation analyses show that user costs play an important role in potentially explaining the above long-term average appreciation rates experienced from 2000 to 2005 in many residential real estate markets nationally. |
| doi_str_mv | 10.1080/10835547.2005.12091606 |
| format | Article |
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The simulations show that user costs can easily exceed the total of capital gains and imputed or actual rents based upon historical long-term real estate mortgage interest and appreciation rates. To offset high user costs and potential lower rates of return on residential equity investments, the purchase price becomes critical. Furthermore, holding periods are important. If there is less than the average 7-year holding period, the higher relative transactions costs result in much higher user costs. In addition, the simulation analyses show that user costs play an important role in potentially explaining the above long-term average appreciation rates experienced from 2000 to 2005 in many residential real estate markets nationally.</description><identifier>ISSN: 1521-4842</identifier><identifier>EISSN: 1930-8914</identifier><identifier>DOI: 10.1080/10835547.2005.12091606</identifier><language>eng</language><publisher>Clemson: American Real Estate Society</publisher><subject>Capital gains ; Correlation ; Cost control ; Cost estimates ; Cost Indexes ; Depreciation ; Down payments ; Equity ; Expenditures ; Family (Sociological Unit) ; Home ownership ; Housing ; Inflation ; Insurance ; Interest rates ; Investment ; Investment return rates ; Investments ; Investors ; Maintenance ; Maintenance costs ; Mortgage loans ; Outcomes of education ; Ownership ; Portfolio management ; Prices ; Property ownership ; Property taxes ; Property values ; Purchasing ; Rates of return ; Real estate ; Residential real estate ; Return on equity ; Simulation ; Single family ; Studies ; Taxes ; User costs</subject><ispartof>Journal of real estate practice and education, 2005-01, Vol.8 (1), p.1-24</ispartof><rights>Copyright American Real Estate Society 2005</rights><lds50>peer_reviewed</lds50><oa>free_for_read</oa><woscitedreferencessubscribed>false</woscitedreferencessubscribed><citedby>FETCH-LOGICAL-c2986-6cd177524789f2d96cea5b84007698ba51828fcae373cbca93509d38181ebf3d3</citedby><cites>FETCH-LOGICAL-c2986-6cd177524789f2d96cea5b84007698ba51828fcae373cbca93509d38181ebf3d3</cites></display><links><openurl>$$Topenurl_article</openurl><openurlfulltext>$$Topenurlfull_article</openurlfulltext><thumbnail>$$Tsyndetics_thumb_exl</thumbnail><linktopdf>$$Uhttps://www.jstor.org/stable/pdf/24862909$$EPDF$$P50$$Gjstor$$H</linktopdf><linktohtml>$$Uhttps://www.jstor.org/stable/24862909$$EHTML$$P50$$Gjstor$$H</linktohtml><link.rule.ids>314,780,784,803,27924,27925,58017,58250</link.rule.ids></links><search><creatorcontrib>DeRieux, Walter R.</creatorcontrib><creatorcontrib>Benjamin, John D.</creatorcontrib><creatorcontrib>Miller, Norman G.</creatorcontrib><title>Estimating User Costs and Rates of Return for Single-Family Residential Real Estate</title><title>Journal of real estate practice and education</title><description>This paper discusses the costs of home ownership and their potential impact on real estate returns. 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In addition, the simulation analyses show that user costs play an important role in potentially explaining the above long-term average appreciation rates experienced from 2000 to 2005 in many residential real estate markets nationally.</description><subject>Capital gains</subject><subject>Correlation</subject><subject>Cost control</subject><subject>Cost estimates</subject><subject>Cost Indexes</subject><subject>Depreciation</subject><subject>Down payments</subject><subject>Equity</subject><subject>Expenditures</subject><subject>Family (Sociological Unit)</subject><subject>Home ownership</subject><subject>Housing</subject><subject>Inflation</subject><subject>Insurance</subject><subject>Interest rates</subject><subject>Investment</subject><subject>Investment return rates</subject><subject>Investments</subject><subject>Investors</subject><subject>Maintenance</subject><subject>Maintenance costs</subject><subject>Mortgage loans</subject><subject>Outcomes of education</subject><subject>Ownership</subject><subject>Portfolio management</subject><subject>Prices</subject><subject>Property ownership</subject><subject>Property taxes</subject><subject>Property values</subject><subject>Purchasing</subject><subject>Rates of return</subject><subject>Real estate</subject><subject>Residential real estate</subject><subject>Return on equity</subject><subject>Simulation</subject><subject>Single family</subject><subject>Studies</subject><subject>Taxes</subject><subject>User costs</subject><issn>1521-4842</issn><issn>1930-8914</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>2005</creationdate><recordtype>article</recordtype><sourceid>8G5</sourceid><sourceid>ABUWG</sourceid><sourceid>AFKRA</sourceid><sourceid>AZQEC</sourceid><sourceid>BENPR</sourceid><sourceid>CCPQU</sourceid><sourceid>DWQXO</sourceid><sourceid>GNUQQ</sourceid><sourceid>GUQSH</sourceid><sourceid>M2O</sourceid><recordid>eNo9UMFOwzAMjRBIjMEngCLuHU7SpMkRTRsgTULa2DlK2xR16tqRZIf9PZ7KuNiW_J7f8yPkicGMgYYXLELKvJhxADljHAxToK7IhBkBmTYsv8ZZcpblOue35C7GHQAHnhcTslnE1O5davtvuo0-0PkQU6Sur-naJR_p0NC1T8fQ02YIdIO4zmdLt2-7Ey5iW_s-ta7DGQseQ9I9uWlcF_3DX5-S7XLxNX_PVp9vH_PXVVZxo1WmqpoVhUQb2jS8NqryTpY6ByiU0aWTTHPdVM6LQlRl5YyQYGqhmWa-bEQtpuR5vHsIw8_Rx2R3AxpFSctRQTBjCgSpEVSFIcbgG3sI-HA4WQb2nJ-95GfP-dlLfkh8HIm7mIbwz-K5VtyAEb_tLWtd</recordid><startdate>20050101</startdate><enddate>20050101</enddate><creator>DeRieux, Walter R.</creator><creator>Benjamin, John D.</creator><creator>Miller, Norman G.</creator><general>American Real Estate Society</general><general>Taylor & Francis Ltd</general><scope>AAYXX</scope><scope>CITATION</scope><scope>0-V</scope><scope>0U~</scope><scope>1-H</scope><scope>3V.</scope><scope>7RQ</scope><scope>7WY</scope><scope>7WZ</scope><scope>7X1</scope><scope>7XB</scope><scope>87Z</scope><scope>88B</scope><scope>8FK</scope><scope>8FL</scope><scope>8G5</scope><scope>ABUWG</scope><scope>AFKRA</scope><scope>ALSLI</scope><scope>ANIOZ</scope><scope>AZQEC</scope><scope>BENPR</scope><scope>BEZIV</scope><scope>CCPQU</scope><scope>CJNVE</scope><scope>DWQXO</scope><scope>FRNLG</scope><scope>F~G</scope><scope>GNUQQ</scope><scope>GUQSH</scope><scope>K60</scope><scope>K6~</scope><scope>L.-</scope><scope>L.0</scope><scope>M0C</scope><scope>M0P</scope><scope>M2O</scope><scope>MBDVC</scope><scope>PADUT</scope><scope>PQBIZ</scope><scope>PQBZA</scope><scope>PQEDU</scope><scope>PQEST</scope><scope>PQQKQ</scope><scope>PQUKI</scope><scope>PRINS</scope><scope>PYYUZ</scope><scope>Q9U</scope><scope>S0X</scope><scope>U9A</scope></search><sort><creationdate>20050101</creationdate><title>Estimating User Costs and Rates of Return for Single-Family Residential Real Estate</title><author>DeRieux, Walter R. ; Benjamin, John D. ; Miller, Norman G.</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c2986-6cd177524789f2d96cea5b84007698ba51828fcae373cbca93509d38181ebf3d3</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>2005</creationdate><topic>Capital gains</topic><topic>Correlation</topic><topic>Cost control</topic><topic>Cost estimates</topic><topic>Cost Indexes</topic><topic>Depreciation</topic><topic>Down payments</topic><topic>Equity</topic><topic>Expenditures</topic><topic>Family (Sociological Unit)</topic><topic>Home ownership</topic><topic>Housing</topic><topic>Inflation</topic><topic>Insurance</topic><topic>Interest rates</topic><topic>Investment</topic><topic>Investment return rates</topic><topic>Investments</topic><topic>Investors</topic><topic>Maintenance</topic><topic>Maintenance costs</topic><topic>Mortgage loans</topic><topic>Outcomes of education</topic><topic>Ownership</topic><topic>Portfolio management</topic><topic>Prices</topic><topic>Property ownership</topic><topic>Property taxes</topic><topic>Property values</topic><topic>Purchasing</topic><topic>Rates of return</topic><topic>Real estate</topic><topic>Residential real estate</topic><topic>Return on equity</topic><topic>Simulation</topic><topic>Single family</topic><topic>Studies</topic><topic>Taxes</topic><topic>User costs</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>DeRieux, Walter R.</creatorcontrib><creatorcontrib>Benjamin, John D.</creatorcontrib><creatorcontrib>Miller, Norman G.</creatorcontrib><collection>CrossRef</collection><collection>ProQuest Social Sciences Premium Collection</collection><collection>Global News & ABI/Inform Professional</collection><collection>Trade PRO</collection><collection>ProQuest Central (Corporate)</collection><collection>Career & Technical Education Database</collection><collection>Access via ABI/INFORM (ProQuest)</collection><collection>ABI/INFORM Global (PDF only)</collection><collection>Accounting & Tax Database</collection><collection>ProQuest Central (purchase pre-March 2016)</collection><collection>ABI/INFORM Global (Alumni Edition)</collection><collection>Education Database (Alumni Edition)</collection><collection>ProQuest Central (Alumni) (purchase pre-March 2016)</collection><collection>ABI/INFORM Collection (Alumni Edition)</collection><collection>Research Library (Alumni Edition)</collection><collection>ProQuest Central (Alumni Edition)</collection><collection>ProQuest Central UK/Ireland</collection><collection>Social Science Premium Collection</collection><collection>Accounting, Tax & Banking Collection</collection><collection>ProQuest Central Essentials</collection><collection>ProQuest Central</collection><collection>Business Premium Collection</collection><collection>ProQuest One Community College</collection><collection>Education Collection</collection><collection>ProQuest Central Korea</collection><collection>Business Premium Collection (Alumni)</collection><collection>ABI/INFORM Global (Corporate)</collection><collection>ProQuest Central Student</collection><collection>Research Library Prep</collection><collection>ProQuest Business Collection (Alumni Edition)</collection><collection>ProQuest Business Collection</collection><collection>ABI/INFORM Professional Advanced</collection><collection>ABI/INFORM Professional Standard</collection><collection>ABI/INFORM Global</collection><collection>Education Database</collection><collection>Research Library</collection><collection>Research Library (Corporate)</collection><collection>Research Library China</collection><collection>ProQuest One Business</collection><collection>ProQuest One Business (Alumni)</collection><collection>ProQuest One Education</collection><collection>ProQuest One Academic Eastern Edition (DO NOT USE)</collection><collection>ProQuest One Academic</collection><collection>ProQuest One Academic UKI Edition</collection><collection>ProQuest Central China</collection><collection>ABI/INFORM Collection China</collection><collection>ProQuest Central Basic</collection><collection>SIRS Editorial</collection><jtitle>Journal of real estate practice and education</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>DeRieux, Walter R.</au><au>Benjamin, John D.</au><au>Miller, Norman G.</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>Estimating User Costs and Rates of Return for Single-Family Residential Real Estate</atitle><jtitle>Journal of real estate practice and education</jtitle><date>2005-01-01</date><risdate>2005</risdate><volume>8</volume><issue>1</issue><spage>1</spage><epage>24</epage><pages>1-24</pages><issn>1521-4842</issn><eissn>1930-8914</eissn><abstract>This paper discusses the costs of home ownership and their potential impact on real estate returns. The simulations show that user costs can easily exceed the total of capital gains and imputed or actual rents based upon historical long-term real estate mortgage interest and appreciation rates. To offset high user costs and potential lower rates of return on residential equity investments, the purchase price becomes critical. Furthermore, holding periods are important. If there is less than the average 7-year holding period, the higher relative transactions costs result in much higher user costs. In addition, the simulation analyses show that user costs play an important role in potentially explaining the above long-term average appreciation rates experienced from 2000 to 2005 in many residential real estate markets nationally.</abstract><cop>Clemson</cop><pub>American Real Estate Society</pub><doi>10.1080/10835547.2005.12091606</doi><tpages>24</tpages><oa>free_for_read</oa></addata></record> |
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| subjects | Capital gains Correlation Cost control Cost estimates Cost Indexes Depreciation Down payments Equity Expenditures Family (Sociological Unit) Home ownership Housing Inflation Insurance Interest rates Investment Investment return rates Investments Investors Maintenance Maintenance costs Mortgage loans Outcomes of education Ownership Portfolio management Prices Property ownership Property taxes Property values Purchasing Rates of return Real estate Residential real estate Return on equity Simulation Single family Studies Taxes User costs |
| title | Estimating User Costs and Rates of Return for Single-Family Residential Real Estate |
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