SFB 649 Discussion Paper 2008-013 House Prices and Replacement Cost: A Micro-Level Analysis Rainer Schulz* Axel Werwatz** * University of Aberdeen, United Kingdom ** Technische Universität Berlin, Germany This research was supported by the Deutsche...

In a world with complete markets and no transactions cost, the decision whether to rent or buy a home is separate from a household's professional income risk. If markets are incomplete and have frictions, however, profession- specific income risk, regional house price risk, and mobility needs...