Housing Demand in the Developing Metropolis: Estimates from Bogota and Cali, Colombia

Abstract

This paper presents estimates of housing demand equation parameters separately for owners and renters in Bogota and Cali, Colombia in 1978, and for Bogota renters only in 1972. The demand estimation procedure uses a workplace based stratification to introduce price variation in the equations. The demand equations estimated using this procedure give very significant results for the income elasticity of the demand for housing. Other household characteristics involved in the demand equations have low demand elasticities. The age of household head has a positive elasticity over most of its range while family size usually has a positive elasticity for renters and a negative elasticity for owners. Female headed households seem to consume more than male headed households, but this result is rarely statistically significant. Distance from home to work is entered into the equations as an adjustment to income, but it is undoubtedly also representing price variation within the workplace strata that are used as the main representation of price variation. The distance elasticity is small and almost always negative. Comparison with US data sets indicate that the range of the Colombian estimates generally overlaps the range of the US estimates.