Constructing Indices of the Price of Multifamily Properties Using the 1991 Survey of Residential Finance

Indices of the price of constant quality owner-occupied single family housing are widely available and have been instrumental in learning about the operations of the market for owner-occupied housing. Such is not the case for multifamily rental housing. The purpose of this paper is to provide information about movements in the price of multifamily properties during the 1980s and early 1990s using the 1991 Residential Finance Survey (RFS). Several conclusions are drawn from the development and analysis of indices of the price of multifamily housing for the nation and four large states (California, Florida, New York, and Texas). First, indices for the period 1983-1991 generate similar patterns among the various methods employed; furthermore, movements in the index during the period 1983-1991 seem reasonable. Second, much regional variation exists. Prices in Texas were particularly hard hit, falling by over 25 percent in nominal terms between 1983 and 1991. Third, the impact of the Tax Reform Act of 1986 does not appear to have been as dramatic as some have suggested. Indeed, price declines do not show up in either the 1986 or 1987 indices for the nation, California, or New York