The Q Theory of Housing Investment

UNCG Author/Contributor (non-UNCG co-authors, if there are any, appear on document)
Daniel T. Winkler, Professor (Creator)
Gustav D. Jud, Retired (Contributor)
The University of North Carolina at Greensboro (UNCG )
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Abstract: This paper presents estimates of a Q model of housing investment, using quarterly data for the United States. The empirical model is estimated using building permits, housing starts, and housing investment expenditures as measures of investment. The current and lagged values of the Q ratio are found to be positively and significantly associated with housing investment, whichever way investment is measured. The findings suggest that the housing market indeed functions as Tobin has theorized. Housing suppliers appear to respond to the demands of housing consumers, building more new homes when existing home prices are high relative to new home prices.

Additional Information

Journal of Real Estate Finance and Economics, vol. 27, no. 3, 2003, pp. 379-92
Language: English
Date: 2003
Q ratio, Q theory, Housing investment

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