Income is also an important determi

Income is also an important determinant. Empirical measures of the income elasticity of demand in North America range from 0.5 to 0.9 (De Leeuw 1971). If permanent income elasticity is measured, the results are slightly higher (Kain and Quigley 1975) because transitory income varies from year to year and across individuals, so positive transitory income will tend to cancel out negative transitory income. Many housing economists use permanent income rather than annual income because of the high cost of purchasing real estate. For many people, real estate will be the costliest item they will ever buy.