JOURNAL OF HOUSING ECONOMICS 5, 290–301 (1996)

ARTICLE NO. 0015

BOOK REVIEW

DENISE DIPASQUALE AND WILLIAM C. WHEATON, Urban Economics and

Real Estate Markets. Englewood Cliffs, New Jersey; Prentice Hall, 1996.
378 pp.

This is a super book. It is certainly the most important book in real estate
economics over the last quarter-century. It is also arguably the best book
in urban economics since the first edition of Edwin Mills’ textbook Urban
Economics which to a large extent defined urban economics as a field.
Despite its title, the book does not attempt a comprehensive overview
of urban economics, nor does it provide more than an introduction to real
estate finance. Rather, it applies urban economics to study the real side of
real estate. In so doing, it redefines (real) real estate economics as a part
of urban economics, thereby enriching both fields.
This book review will be unconventional. One can fault the book for not
covering this topic or that topic, but it is impossible nowadays to write a
comprehensive book in any field, and choice of topics is largely a matter
of taste and professional experience. Apart from this, I have no serious
criticisms of the book. In fact, I wish I had the range of talents to do
comparable work. So I dithered in deciding how to review a book that I
judge to be in all respects excellent. I considered writing a two word review.
‘‘Read it.’’ But that would have been a cop-out. I finally decided to organize
my review into three sections, the first discussing what makes the book so
good, the second considering the book as a textbook, and the third proceed-
ing linearly through the book, focusing on selected issues.

1. WHAT MAKES THE BOOK SO GOOD?

Back perhaps a decade ago, I checked out real estate economics. I can’t
remember exactly why, but I think I was starting work on the role of
vacancies in housing market adjustment and wanted to see what had been
done by real estate economists. Perhaps I picked out the wrong books, but
I was almost embarrassed. While the books were informative and no doubt
useful to the real estate practitioner, they were pedestrian in the extreme
and what little economics they contained was not even at the level of a
superior principles textbook. By the standards of the field at that time, a
present value calculation was high theory. The field was indeed an intellec-
tual backwater.
290
1051-1377/96 $18.00
Copyright  1996 by Academic Press, Inc.
All rights of reproduction in any form reserved.
 BOOK REVIEW 291

Over the past decade, there has been a revolution in real estate econom-
ics—much as there was in urban economics two decades earlier. From a
casual perusal of Real Estate Economics (previously the AREUEA Journal )
and the Journal of Real Estate Finance and Economics, now the two top
journals in real estate economics, it is evident that real estate is now very
much in the mainstream. The revolution started in real estate finance. With
the development of the secondary mortgage market came the need to price
mortgage-backed securities, and option-pricing theory was there ready to
be applied. That theory has subsequently been applied to real options—the
pricing of real estate under uncertainty. There have been other major
developments on the real side of real estate economics. Principal–agent/
mechanism-design/contract theory has been extensively applied to incen-
tive problems in real estate, most notably to real estate brokerage but also
to incentive contracting in real estate development. Game theory has been
applied to the land assembly problem and to tax competition between
local governments. Several strands of modern macroeconomic theory have
been adapted to real estate macroeconomics: monopolistic competition/
matching/search models, imperfect capital markets and the credit transmis-
sion mechanism of monetary policy, and the new economic dynamics. At
the same time, the level of sophistication of empirical work has increased
impressively. The application of time series econometrics to real estate
dynamics is particularly noteworthy.
One thing that makes this book so good is that it is thorougly modern.
It touches on all the recent developments and brings the reader right to
the research frontier on all the topics treated. At the same time, it avoids
faddishness, using the new tools and perspectives where appropriate, but
not overemphasizing them at the expense of traditional theory.
Perhaps the greatest contribution of the book is that, by applying the
best tools—old and new—consistently and coherently to a broad range of
topics in real estate economics, it redefines real estate economics and brings
it squarely into the mainstream. Just as Mills’ textbook defined the new
urban economics, Atkinson and Stiglitz’ textbook Lectures on Public Eco-
nomics the new public economics, and Tirole’s textbook The Theory of
Industrial Organization the new industrial organization, so this book defines
(the real side of ) the new real estate economics. Through its organization
of topics, it provides a conceptual integration and bird’s-eye view of the
field, and through its asides on what we don’t know and its emphases, it
provides a broad and coherent research agenda. Without question, the
book will shape the direction of the field for many years to come.
Another great strength of the book is its method. Economics, or at least
modern applied economics, has been so successful largely because of its
method. The method has two main components. The first is model-based
reasoning. The collection of mainstream models in economics provides a
292 BOOK REVIEW

kit-bag of tools, and much of the art of applied economics, which distin-
guishes the technician from the gifted economist, is the ability to choose
the right set of tools for the job at hand. The second is the interplay between
models on the one hand and data and real phenomena on the other. This
book does a really marvelous job of presenting data and then building a
model broadly consistent with the data, or of presenting a model and then
showing how it fits the facts. Many students are very resistant to abstract
model-based reasoning. They do not appreciate how models organize one’s
thoughts about a complex real-world problem. Neither, due to lack of
experience, do they perceive how useful models are in practical application,
nor do they understand the didactic value of models in training one to
think analytically. American students especially, with their strong training
in critical thinking, their desire for instant intellectual gratification, and
their insistence on relevance, are not impressed when told to take it on
faith that model-based reasoning is the best way to learn economics. This
book should persuade even the most skeptical student of the power of
models, not by preaching but by repeated application and osmosis.
Although it is now out of print, I continue to teach my graduate public
finance course using Atkinson and Stiglitz’ textbook. Contrary to what
some of my students think at the time (though not in retrospect, I hope),
the reason I do so is not laziness but a desire to expose the students to
really first-class economic reasoning (as well as to the core models and
topics). Much the same goes for this book, though its style of reasoning is
significantly different. Atkinson and Stiglitz’ style is more theoretical and
a priorist. This book’s approach is more positivist: Here are the empirical
characteristics of the issues at hand. How can we use models to understand
what’s going on? The level of economic reasoning is consistently excellent—
not simply without error, but combining good plain common sense (the
hallmark of the good applied economist but not of the theorist!) with great
intelligence and a high level of intellectual sophistication. I would much
prefer to teach out of this book which shows real intellectual distinction
than out of a book whose coverage is more comprehensive but whose
treatment is prosaic.
This book displays not only intellectual distinction but also distinction
in presentation. The book is remarkably well-written. American technical
style is designed for clarity but is often terribly dull. This book’s style is
certainly clear but is also about as lively and conversational as the rules of
American technical style permit. The book also does a superb job of ex-
plaining the economic concepts in words, even though many of the concepts
are abstract, techincal, and/or advanced.
While perhaps not contributing to the book’s excellence, there were two
other features of the book I liked. The first was it modesty. The treatment
of topics was consistently state-of-the-art and for some topics new material
 BOOK REVIEW 293

was presented. As well, for many of the topics the authors have made
significant research contributions and for several were the research pio-
neers, but one would not know this from reading the book. But there are
no drumrolls or fanfares, or inflated claims of seminal contributions. The
focus is sharply on the subject matter. The book’s choice of topics does
reflect the authors’ research contributions, but it is only natural to concen-
trate on what one has thought deeply about and believes to be important.
The second feature is the quality of the printing job—high-quality paper,
clear printing, excellent copy-editing and mathematical typesetting, and
beautifully done figures. No doubt this is because the book was written
and published as a textbook. Nevertheless, the editors at Prentice Hall can
take bibliophilic pride in a job well-done.1
All in all, this book is beautifully crafted, so much so that part of my
pleasure in reading it was aesthetic.

2. APPROPRIATENESS AS A TEXTBOOK

In the preface the authors state that ‘‘the book [was designed] for use
in advanced undergraduate courses in real estate and urban economics and
in graduate level courses in business schools and schools of public policy
and planning . . . [and assumes only] one course in economics principles
. . . [and] a solid knowledge of high school mathematics’’ (p. ix). In econom-
ics articles and textbooks, there is a high correlation between the level of
mathematics employed and the level of conceptual sophistication. This
book, with its combination of conceptual sophistication and elementary
mathematics, is an outlier. Does this combination work?
It does for the professional economist. The book is so well-written that
the use of words rather than mathematics is not bothersome. I am not sure,
however, that the book will be popular in the classroom. For 20 years I have
been teaching a model-based course in undergraduate urban economics that
employs the same combination of conceptual sophistication and elementary
mathematics. I encounter resistance from all but the best students, stemming
I think from their frustration at finding it so difficult to follow an extended
analytical argument, whether it be in words or mathematics. I persist in
my approach since I view it as part of an undergraduate economics teacher’s
mission to get students to think like economists. I do, however, get discour-
aged on occasion. This book is not as extreme as my course. It does a
better job of relating theory to observation, illustrating how useful the
models are in practical applications, and generally motivating the material.
It also spells out the arguments in more detail and provides more down-

1
I do, however, have two cavils: I object to the plasticized cover and to the lurid cover design.
294 BOOK REVIEW

to-earth intuition. Nevertheless, I think that adoption of this book as the

central text for a course at all but the very best universities would result
in considerable wailing and gnashing of teeth. I am not going to advise
against adoption, however, since too many undergraduate courses and
courses in professional schools take the low road, with the result that most
students never really learn to reason. Perhaps a happy compromise would
be to use an easier book as the principal required book and this book as
the secondary required book. That way students would be exposed to first-
class economic reasoning without being frustrated at failing to master the
more difficult material for examinations, and the best students would receive
some intellectual nourishment.
Both the authors have taught at only the very top schools and may fail
to appreciate how steep the intelligence gradient is as one moves down the
rankings. I would like to be wrong but I doubt the book will be a bestseller.
I do not think, however, that it was a mistake to write the book as a
textbook. It should be adopted at the top schools. Through those students
getting jobs at a broad range of schools, the new (real) real estate economics
that this book defines will filter through the field.
A final comment. This book is not appropriate as the central book in an
urban economics course. Its coverage is too narrow. Virtually no space is
devoted to urban transportation and little to urban public finance—two of
the main subfields of urban economics. Its perspective is not a standard
one in urban economics. There is very little discussion of public policy in
general or housing policy in particular, or of many important topics in
urban economics, including pollution, crime, and race. It would, however, be
an excellent supplementary text for the spatial economic, housing economic,
and urban macroeconomic sections of a graduate course in urban eco-
nomics.

3. SUBJECT MATTER

The core of the book is divided into two quite distinct parts. The first,
‘‘Microeconomic Analysis of Property Markets,’’ does a superb job of
applying modern urban economics to the study of property markets. There
is not much here that will be new to the average urban economist. Partly
this is because most major theoretical advances in urban economics came
in the 1970s, but also there is little discussion of more recent developments.
Nevertheless, its synthesis of mainstream spatial and housing economics is
most impressive. It succeeds admirably in expositing the basic material and
in conveying a bird’s-eye view of how competitive property markets work.
The second part, ‘‘Macroeconomic Analysis of Property Markets,’’ is less
polished but more intellectually stimulating, at least for the specialist. The
 BOOK REVIEW 295

new urban economics is applied microeconomics. Its development resulted

in the accumulation of an impressive body of theory, but inadvertently
deflected interest away from urban macroeconomics. Only very re-
cently—in the past five years or so—have urban economists started thinking
again about urban macroeconomics. The authors have been leaders in this
resurgence and the material presented in this section actually goes beyond
the state of the art. I found this part very exciting and believe it will spark an
explosion of interest and research in urban and real estate macroeconomics.
Having presented a broad overview of the book, I shall now work my
way through it section by section. Rather than provide a comprehensive
review I shall restrict my comments to aspects that I found particularly inter-
esting.
● Section One: Introduction to Real Estate Markets
● Chapter 1: The Property and Capital Markets
● Chapter 2: The Operation of Property Markets: A Micro and
Macro Approach
Because of its almost exclusive reliance on static (but sometimes interpre-
ted as stationary state) models, the new urban economics blurred the distinc-
tion between property values and rents, and between the asset and use
markets for housing. This book consistently draws the distinction between
the two markets sharply and integrates the analysis of the two markets
very nicely.2
● Section Two: Microeconomic Analysis of Property Markets
● Chapter 3: The Urban Land Market: Rents and Prices
● Chapter 4: The Urban Housing Market: Structural Attributes
and Density
● Chapter 5: Firm Site Selection, Employment Decentralization, and
Multicentered Cities
● Chapter 6: Retail Location and Market Competition
One of the main points at issue in modeling housing markets is whether
the housing market should be treated as perfectly competitive or imperfectly
competitive. The appropriate choice is to some extent an empirical issue
but also depends on the modeling context. My view is that in most positive,
microeconomic analysis the benefit in simplification achieved by the com-
petitive assumption outweighs the cost of some loss in descriptive realism.
But the competitive assumption is far from innocuous in policy analysis
since it begs the question concerning the efficiency of market equilibrium
and hence of the potential desirability of government intervention. As
2
Two quibbles: First, since rent is a price, I prefer to refer to the asset price of housing as
housing value rather than as housing price. Second, von Thünen rather than Ricardo deserves
the distinction as the father of urban spatial economics. von Thünen’s theory of agricultural
land rent and land use was based on differences in accessibility, which is the defining feature
of the monocentric city model, while Ricardo’s was based on differences in fertility.
296 BOOK REVIEW

well, given the apparent importance of vacancies in the housing market

adjustment process, the competitive assumption is probably inappropriate
in models of the microfoundations of housing macroeconomics. The au-
thors’ treatment is consistent with my views.
Every reader will be disappointed by omission of some of her favorite
topics. I, for instance, was disappointed that the authors did not discuss
filtering models à la Sweeney or the effects of uncertainty on the asset
price of housing, or devote more attention to dynamic, spatial models of
durable housing with and without redevelopment. Nevertheless, I approve
of the authors’ selective approach. The basics are well-covered and instruc-
tors can add material as they wish. Also, because the authors wrote on
topics in which they have a special interest, the book has sparkle, in contrast
to the soporific quality of most principles textbooks.
The authors’ omission of filtering models from Chap. 4 raises a broader
issue. How does residential real estate economics, which this book treats,
differ from housing economics? There is considerable overlap, but there
are also significant differences which stem, I think, from differences in
intended application. Residential real estate economics looks at the housing
market from the landlord/developer’s perspective, while housing economics
tends to take a policymaker’s more prescriptive and typically more interven-
tionist point of view. It is noteworthy that this book makes no reference
to race or poverty.
The comment has frequently been made that urban economics has devel-
oped an impressive body of theory to describe a type of city that no longer
exists—the monocentric city. This comment neglects that the theory has
broad application if ‘‘distance to the CBD’’ is interpreted as a metaphor
for accessibility. However, with respect to the theory’s ability to describe
the actual spatial structure of cities, the comment is on the mark. Chapter
5 provides a nice introduction to the emerging literature on employment
decentralization and subcentering, with a particularly nice discussion of the
simultaneous determination of rents and wages over location.3
A difficult decision in writing a book on urban economics is how to
treat spatial competition theory/strategic firm location theory/classical
retail competition theory—the vast literature that has evolved from the
‘‘Hotelling ice-cream sellers’ problem,’’ in which two ice-cream sellers
decide where to locate on a beach and what price to charge.4 The theory
has evolved largely independently of urban economics and employs the
3
One feature of Chaps. 5 and 6 puzzled me. The authors provide much of their data on
the distribution of employment in the Boston area (Figs. 5.3, 5.4, 5.6, 5.7, 5.9, 5.10, 6.1, and
6.2) in terms of employment shares for its 146 cities and towns (e.g., Boston had 16.5% of
the area’s retail jobs in 1990). I fail to see how this is more informative than providing the
data in per capita terms.
4
In fact, Hotelling’s paper makes no mention of ice-cream sellers.
 BOOK REVIEW 297

tools of game theory rather than of competitive equilibrium analysis.

The models are fun to work through, but most of the results are so
model-specific that one is left wondering what general insights the
literature provides. Chapter 6 provides a fair and sensible treatment. Its
basic theme is that classical retail competition theory does provide some
broad insights into the strategic aspects of retail location, but because
it assumes unrealistically that a consumer makes a separate shopping
trip for each good purchased (modeling trip chains/multi-purpose trips
has proved formidably difficult) is deficient as a basis for empirical work.
The authors present a promising alternative model based on discrete
choice theory in which consumers visit alternative shopping centers with
probabilities that depend on the centers’ characteristics, and then once
at a center visit a particular store with a probability that depends
on the characteristics of that store and all the other stores in the
shopping center.
● Section Three: Macroeconomic Analysis of Property Markets
● Chapter 7: Economic Growth and Metropolitan Real Estate
Markets
● Chapter 8: The Market for Housing Units: Households, Prices,
and Financing
● Chapter 9: The Market for Housing Services: Moving, Sales,
and Vacancy
● Chapter 10: The Cyclical Behavior of Metropolitan Housing
Markets
● Chapter 11: The Operation of Nonresidential Property Markets
● Chapter 12: Econometric Analysis of Metropolitan Office and
Industrial Markets
Regional economics has remained a backwater, employing much the
same base multipliers, shift-share analysis, input–output models, and unso-
phisticated macro models as it did 25 years ago. To a considerable extent,
the lack of interest the profession has shown in the field is understandable.
Much like physics and biology, the glamorous fields in economics focus on
the very small (microeconomic theory) or the very large (macroeconomic
theory). The messy, practical middle ground tends to be microeconomics
writ large or macroeconomics writ small. The unattractiveness of the field
is compounded by its being an applied field hampered by serious data
deficiencies and sponsored by state governments which tend to be neither
generous in funding research nor discriminating in its evaluation. Chapter
7 demonstrates, however, that it is possible to do very interesting work by
adapting and supplementing the traditional tools of the field. The center-
piece of the chapter is a three-sector model of metropolitan economic
growth that accounts for the interaction between the output market, the
labor market, and the real estate market. It is the inclusion of the real
298 BOOK REVIEW

estate market that makes the model especially interesting. Perhaps it is

time to develop a ‘‘new’’ regional economics.
Chapter 8 provides an insightful overview of a potpourri of topics relating
to the housing market: demographics, tenure choice, mortgages and the
mortgage market, and the effect of federal tax policy on the user cost of
capital in housing. A curious omission from this chapter and indeed from
the entire book is a discussion of the industrial organization of real estate
development. The authors seem just to assume that builder-developers act
competitively. This is standard but not self-evident. The friction of space
confers market power; imperfect capital markets may give large established
developers a significant advantage; housing is a highly differentiated prod-
uct; and developers go to great lengths to hide their intentions in acquiring
large, contiguous blocks of land even though ‘‘economies of contiguity’’
are probably small. In any event, the supply side of the real estate market
merits more attention.
Chapters 9 through 12 are the most original in the book, containing
material that is either new or very recent. From the specialist’s point of view,
they are the most exciting, but from a student’s, probably the least coherent.
What approach should be adopted in developing a macroeconomics of
real estate markets and in analyzing real estate cycles? The current wisdom
seems to be that nonbehavioral time series models, which focus on the error
structure, perform better in short-term forecasting but are outperformed by
behavioral models over the medium and long term. Since most agents in
real estate markets are concerned with the medium term, behavioral models
which pay considerable attention to the error structure are probably the
most promising. There seems to be a consensus that vacancies perform a
crucial role in real estate market adjustment and at least a dominant view
that a real estate market has a steady-state structural vacancy rate akin to
the natural rate of unemployment, with movement around the structural
rate. What is needed, therefore, are behaviorally based models that generate
a structural vacancy rate and has sensible transient dynamics.
Many housing economists have commented on the broad analogies be-
tween labor markets and housing markets. There are many types of labor-
economic-theoretic models which generate a natural rate of unemployment,
and it should be possible to adapt almost all of them to generate sensible
models of housing vacancies. However, the small literature on the subject,
including Chapter 9, puts search and matching at center stage. Even control-
ling for quality, housing units are highly differentiated, as are households’
tastes over housing characteristics. This suggests that a typical household
is willing to search extensively for a unit that suits its tastes. On the other
side of the market, a typical seller (a landlord in the rental market) realizes
that, because of heterogeneity in taste, different households have different
reservation prices. This gives the seller market power and she will choose
 BOOK REVIEW 299

price trading off a higher price against a longer expected time-to-sale. Since
entry into the housing market and exit from it are essentially free, the
equilibrium is monopolistically competitive, with excess capacity manifest-
ing itself as vacancies. Such models hold considerable promise for providing
sound microfoundations for housing market macroeconomics. Indeed, I
forecast that research along these lines will be one of the major thrusts
of not only real estate economics but also urban economics in the next
few years.
The model of equilibrium vacancies presented in Chap. 9 has some
restrictive features; it assumes that all mobility is internal to the market
and that a household buys a new (nouveau) home before putting its old
one on the market. But the general insights it provides are broad.
One of my pet peeves is the unthinking application of standard macro
investment (stock-flow) models to housing markets. For one thing, in con-
trast to those models, the presence of land results in an upward-sloping
long-run average cost curve (with land price endogenous). For another,
models in the Sweeney tradition suggest that the housing market is seg-
mented. At higher qualities where new construction occurs, values and
rents are supply-determined—determined by construction costs and the
cost of capital, respectively. But at lower qualities, where most of the
housing is hand-me-down, values and rents are largely demand-determined.
Chapter 10 presents an investment-type macroeconomic model of a metro-
politan housing market (somewhat surprisingly making no mention of va-
cancies). While it ignores the Sweeney insight (which may be empirically
unimportant) it does take land into account. Of particular interest is the
sharp contrast in the transient behavior of the model under alternative
expectational hypotheses—adjustment is much smoother under perfect
foresight than under myopic or adaptive expectations. This is not surprising
but somewhat discouraging since it suggests that the properties of real
estate cycles depend heavily on expectations, which are notoriously difficult
to model and to forecast. I anticipate that the next few years will see the
development of a new generation of housing macroeconomic forecasting
models that build on the microfoundations provided by models which high-
light vacancy adjustment, such as the one presented in Chap. 9.
Investment-type forecasting models of the housing market have been
around for almost 30 years. Remarkably, however, until recent work by
Wheaton, in co-authorship with Raymond Torto, there has to my knowledge
been no comparable work on nonresidential—industrial, office, and retail—
property markets. Thus, Chaps. 11 and 12 open up an almost entirely new
and very important line of research. Research on these markets, despite
their obvious importance, has been so slow to develop because of the
paucity of data. Wheaton and Torto have done the profession a real service
by compiling and guesstimating many of the needed time series. The chap-
300 BOOK REVIEW

ters are not easy reading because of their necessary preoccupation with
data issues. But the struggle is worth the effort. Chapter 11 documents the
cyclical pattern of commercial and industrial construction. Office construc-
tion is highly volatile and seems to have a cycle of its own, while office
vacancy rates are both high on average and volatile. Industrial construction
is considerably less volatile and more closely tied to the business cycle, and
the average vacancy rate is lower. The chapter also discusses the ‘‘tenure’’
characteristics of the two property markets, with multi-tenant rental under
complex, long-term leasing contracts being the norm in the office market
and ownership or single-tenant leasing the norm in the industrial market.
Chapter 12 develops two econometric forecasting models, one for office
space in San Francisco and the other for industrial space in Philadelphia,
both of which treat vacancy adjustment explicitly.
Long lags in development, the length and nature of leases (which often
entail the building owner sharing risk with the tenant), and the volatility
of expectations and underlying demand all probably play a role in explaining
why office markets are so volatile. But why is the average vacancy rate
higher in the office market than in the industrial market? Adapting the
heterogeneity argument advanced earlier to explain structural vacancy in
the housing market, one would expect that the commercial structural va-
cancy rate is high because prospective tenants are willing to search a long
time to find just the right space. Intuitively, however, one would expect
industrial space to be at least as heterogeneous, reflecting the technological
particularities of different production processes. The proximate reason this
does not translate into a high structural vacancy rate for industrial space
is that many producers have their space built specially for them. Why does
this not occur in the office market as well—perhaps because commercial
firms are concerned more with location than layout?
● Section Four: The Impact of Local Government on Real Estate
Markets
● Chapter 13: Local Governments, Property Taxes, and Real Es-
tate Markets
● Chapter 14: Public Goods, Externalities, and Development Regu-
lation
These two chapters provide a useful, though somewhat cursory overview
of the role of local governments, the policies they employ, and the impacts
of these policies on real estate markets.

4. CONCLUSIONS

Without question, this is a very important book. The microeconomics

section does a masterful job of applying urban economics to the microeco-
nomics of property markets. The macroeconomics section provides a stimu-
 BOOK REVIEW 301

lating overview of the emerging fields of urban and real estate macroeco-
nomics, implicitly laying out a challenging research agenda. Together the
two sections define the real side of the new real estate economics, much
as Edwin Mills’ textbook defined the new urban economics. The book is
a pleasure to read: the style is clear and sprightly; the organization is
very good; the interplay between models and data is excellently done; the
material covered is consistently interesting; and the macroeconomics section
in particular conveys the excitement of entering uncharted waters. Most
of all, the book is beautifully reasoned, displaying superb economic intelli-
gence and intuition. Not only is this a defining book in real estate economics,
it is also arguably the best book that has been written in applied urban
economics. Despite its accessible style and its minimal use of mathematics,
it is probably conceptually too difficult for use as a textbook at all but the
very top universities. Nevertheless, it is bound to have a huge impact.
Read it.

RICHARD ARNOTT

Boston College
Chestnut Hill, Massachusetts