Which Are the Real Determinants of Tenure? A Comparative Analysis of Different Models of the Tenure Choice of a House

Abstract

Tenure choice is closely bound to other vital individual decisions of great importance not only for the individual but also for the country in which he or she resides. The present paper includes a comparison of the different approaches that have been used in the economic literature in the analysis of the individual’s housing tenure choice. According to their dependent variable, the different models can be divided into: those whose dependent variable is tenure (classical models, ‘recent movers’ models and sequential models) and those in which the dependent variable is transition from renting to the position of ownership (duration models and ‘choice-based’ models). Results show the best performance for the models in which the variable to be explained is the transition from renting to ownership and highlight real determinants of tenure (life-cycle variables) and transition (life-cycle variables, prices and transaction costs). Finally, marital status stands out as the variable with the highest incidence.