The housing market no-arbitrage condition is a theoretically sound basis to evaluate if housing prices are misaligned. Unfortunately, empirical application of the no-arbitrage condition has notable complications. This article reviews these complications and suggests some solutions to them. In particular, the use of implied expected appreciation derived from the no- arbitrage condition is recommended. Furthermore, the paper shows that the maintenance costs as a fraction of the housing price level substantially vary in time and location, which may significantly affect the equilibrium housing price level relative to rental prices. An empirical application of the no-arbitrage relation using data from ten cities in Finland shows that the housing price level has not been based on high expected housing appreciation during the 2000s
