An Econometric Model of Homeownership: Single-Family and Multifamily Housing Option

Abstract

The purpose of this study was to examine the utility of the multifamily housing sector through models of household tenure decision, by comparing the various individual and market characteristics. We utilized individual household-level census data in the United States to detect different responses between single-family housing occupiers and multifamily housing occupiers during the 1980s. We found that although the investment potential for multifamily housing was almost equivalent to that of single-family housing in 1980, multifamily structures had lost their potential by 1990. Given this change, individual households choose multifamily housing as their shelter in a market where housing prices are high. This confirms the hypothesis that, if housing prices rise rapidly in a certain location, then individual consumers who cannot afford single-family housing may try to find a new alternative that meets their financial or other household-specific requirements.