As an immobile, durable and heterogonous good, each housing unit has a bundle of different characteristics. Hedonic price method, which depends on the consumer theory of the classical economics, implies that each characteristic of heterogeneous goods provides a different level of satisfaction or...

In Part 1 ("Divergent Markets") of this three-part series, we document that the recent divergence in inventories of new and existing homes seems to reflect a scarcity of lower- and middle-tier homes. We now examine one potential factor contributing to this shortage: rental demand