Housing Tenure Choice Research Articles

Decoding the puzzle: exploring the factors influencing homeownership in Togo

Purpose This study aims to analyze the factors influencing households housing tenure choices in Togo. Design/methodology/approach The authors applied a rigorous econometric approach, using Harmonized Household Living Conditions Survey (EHCVM) data from 2018 and 2021 to construct a longitudinal panel, and Unified Basic Welfare Indicators Questionnaire (QUIBB) data from 2006, 2011 and 2015 to construct a pseudo-panel. Findings The study reveals that a household’s life-cycle variables like age of the household head, marital status, household size and place of residence, have a significant influence on homeownership. In addition, households in the highest wealth quartiles and used heads of household are more likely to own their home. Research limitations/implications Housing policies focused on improving the financial sustainability of low-income households and reducing the transaction costs associated with property acquisition are essential to promoting homeownership. Practical implications As part of the implementation of the Government Roadmap 2020–2025, the government has committed to providing 20,000 affordable social housing units, aiming to significantly boost the supply of decent housing. However, the findings of this study highlight the need for targeted subsidy programs for low-income households, particularly for female-headed households and those living in urban areas. These subsidies could cover part of the cost of purchasing homes. For middle-income households, it is crucial to develop suitable financing mechanisms, such as low-interest mortgages and loan guarantees. Given demographic pressures and the high cost of public housing programs, promoting self-build remains essential. This support should be accompanied by the provision of low-cost building materials and technical training in innovative, sustainable construction methods. Additionally, improved access to employment and land regularization are essential prerequisites for the success of these initiatives. Originality/value Research on the determinants of tenure choice is relatively limited in sub-Saharan Africa due to the unavailability of housing survey data. This paper proposes a case study of Togo, whose housing market characteristics correspond to most sub-Saharan African countries. Furthermore, this study applied two methodological approaches commonly used in dynamic analyses, thereby enhancing the robustness of the findings.

Predicting the longitudinal patterns of housing affordability stress: Evidence from the Korea Welfare Panel Study

As housing costs increase faster than salary and wage growth worldwide, housing affordability stress (HAS) becomes an increasingly crucial urban problem. However, little evidence exists on under what preconditions HAS experiences are likely to be persistent. This study examines the predictors of chronic forms of HAS experiences in the Korean housing market, characterized by a unique tenure system represented by Jeonse renting (i.e., renting only with a security deposit) and severe regional disparities between the Capital region and the rest of the country. After classifying the longitudinal patterns of HAS between 2011 and 2020, we examine under which preconditions between 2007 and 2010 households were likely to experience chronic forms of HAS. The results reveal that certain combinations of household income, housing tenure choice, and location of residence significantly heighten the probability of experiencing chronic forms of HAS. This study contributes to the literature by highlighting the importance of the longitudinal view of HAS experiences and expanding knowledge about the potential mechanisms that drive chronic forms of HAS.

Generations, permanent income and housing tenure choice: A multinomial logit model approach

This paper examines how generational cohorts influence households’ choices regarding housing tenure and considers the diverse preferences and socio-economic factors that shape decisions—using survey data on 425 families in Ho Chi Minh City, Vietnam. The data is analyzed using a multinomial logit model. The results indicate that generation significantly positively affects housing tenure choice, such that, unlike older cohorts, younger generations are more inclined to rent houses as their preferred housing option. Furthermore, permanent income plays a significant role in shaping housing tenure choices. On the other hand, social-economic variables, namely education, gender of references, family structures, and area of residence, were significant in influencing housing tenure decisions. This finding highlights the importance of housing policies prioritizing affordable and accessible rental options in large cities.

자가소유와 주택담보대출이 가구 소비성향에 미치는 영향

Households, who buy a house, would initially spend less because some equity investment is inevitable. They, however, get to be better off later in terms of household consumption than renters once they enter the stage of paying off the mortgage debt regularly because the uncertainty on how much they save for housing purchase in the future is eliminated. The purpose of this study is twofold: (1) to explore the impact of propensity to own a home on household’s propensity to consume, and (2) to test whether or not the amount of mortgage payment has a crowd-out effect on the propensity to consume. As for the empirical analysis, this study employed the two-step estimation methodolgy to address the potential reverse causality and sample selection bias in the relationship of housing tenure choice with propensity to consume, and in the linkage of mortgage payment with propensity to consume, respectively. This study provides evidence that those effects are significant, and they are greater for lower-income households. These findings justify the differentiated policy tools by income in devising and executing micro- and macro-prudential measures.

Mortgage loan and housing market

Focusing on the evolution of identical single-cohort households concerning their housing service consumption in the life-cycle context, this paper studies the impact of fixed-rate mortgage loans on both the rental and owner-occupied housing markets. Unlike the arbitrarily divided life span usually seen in literature, we “naturally” divide the household’s life cycle into three separate but continuous stages according to their involvement with their mortgage. Then, using inter-stage smoothing conditions, we solve optimal control problems for each life stage. In addition to proposing an implicit method for dealing with durable goods such as housing, we endogenize the housing tenure choice by considering the conversion of a housing renter to a housing owner for a household at different life stages. Our baseline model successfully generates results that are consistent with the empirical evidence. Our numerical comparative statics results reveal the long-run effect of the down-payment ratio, the mortgage interest rate, and the mortgage duration on the equilibrium values of rental housing rate, time for housing purchase, the quantity of housing purchase, and the minimum requirement of housing service to maintain a standard of living. Interpreting these results in terms of homeownership rate, we find that only the mortgage duration positively affects the homeownership rate in the long run.

패널자료를 이용한 밀레니얼 세대의 주택점유형태 결정요인 분석

This study examines the determinants of housing tenure choice decisions of Millennials.
 Using KLIPS panel data from 2014 to 2020, a correlated random effects probit model and a fixed effects logit model were estimated to control for endogeneity problem associated with time-invariant unobserved heterogeneity. Estimation results showed that net wealth, relative housing cost, marital status of household heads were major determinants of housing tenure choice decisions. Permanent income, one of key variables on the housing tenure choice, was not significant, indicating that net wealth rather than income is more important to homeownership decisions of Millennials. However, the effect of net wealth on the probability of home owning was estimated to decrease over the observation period because the increase in net wealth could not catch up with the rise of housing price. A sharp decrease of the effect of net wealth on the probability of home owning in recent years was attributable to a dramatic increase in housing price and more stringent mortgage regulations.

Housing wealth effect and tenure choice: An endogenous switching regression analysis

Market sentiment has been playing a important role in Chinese housing market in last two decades, while has not received enough attentions in literature. With this in mind, this paper first establishes sentiment index depicting housing market sentiment in China. Then, the paper uses an endogenous switching regression model to investigate how housing price affects joint determination of housing choice and non-housing expenditure, with regard to the moderating role of market sentiment. This paper finds that the rising housing prices is negatively related to the probability of being an owner and positively associated with consumption. However, the counter-factual analysis the choice of being a owner has a negative effect on consumption over all and such an effect can be weakened by having a mortgage. A higher sentiment can improve the likelihood of home ownership and reduces non-housing consumption. This study helps households to optimize the wealth allocation and governments in their housing policy strategies and developers in their property development.

Housing tenure choice and socio-economic integration of migrants in rising cities of China

Migrants' socio-economic integration is taken as one of important forms for common prosperity. And it is a crucial factor for social harmony and stability. However, the association between housing tenure choice and migrants' socio-economic integration does not receive enough attention. Based on 2017 China Migrants Dynamics Survey (CMDS), it is found migrants' socio-economic integration mainly consists of the following three aspects: Economic integration, socio-cultural integration and psychological integration. Compared with migrant renters, the socio-economic integration of migrants with houses is rather higher, while migrants' level of socio-economic integration, who live in employee's dormitories, is comparatively low, even after controlling the endogenous by using PSM and IV method. Further study indicates that the effect of housing tenure choice on migrants' socio-economic integration partly affects their settlement intention, integration will, local capital and labor supply. Heterogeneity analysis shows that new generation have a negative effect on the role of homeownership on migrants' socio-economic integration, while living in eastern China and the development of digital economy can both strengthen the effect of housing tenure choice on migrants' socio-economic integration.

주택점유 선택모형의 추정계수 안정성에 관한 연구

The housing market is difficult to predict due to the complexities of macroeconomic conditions, government policy interventions, and ever-changing supply and demand. Furthermore, the structure of a household's housing consumption decision-making can cause structural changes over time. When a market undergoes structural change, government policies based on model coefficients estimated from historical data can be misleading. In particular, permanent income is a major variable in the analysis of housing demand. However, if using current income causes an estimation bias for other variables, the model's stability cannot be guaranteed. This study explores the stability of consumer preference using the primary variables of the housing tenure choice function, such as income, housing cost, housing price volatility, and unit size. The analysis confirms that the household preference system for income, housing costs, and housing price volatility conditions was generally stable in housing consumption from 2002 to 2019. However, there was a significant change in the 2020 housing tenure choice model. The change was statistically significant. Furthermore, the estimation bias model analysis shows that using the current income variable as a proxy for the permanent income variable did not result in any significant estimation bias for other independent variables.

Monetary Policy and Homeownership: Empirical Evidence, Theory, and Policy Implications

We show that monetary policy affects homeownership decisions and argue that this effect is an important and overlooked channel of monetary policy transmission. We first document that monetary policy shocks are a substantial driver of fluctuations in the U.S. homeownership rate and that monetary policy affects households' housing tenure choices. We then develop and calibrate a two-agent New Keynesian model that can replicate the estimated transmission of monetary policy shocks to homeownership rates and housing rents. We find that the calibrated model provides an explanation to the "price puzzle" and delivers two important results with policy implications. First, the homeownership decision channel amplifies the redistributive effects of monetary policy, with contractionary shocks benefiting more outright homeowners and disadvantaging more renters and homeowners with a mortgage. Second, a monetary authority that reacts to a price index that includes housing rents generates excess house price, rents, and output volatility and larger real effects.

Can legal status help unauthorized immigrants achieve the American dream? Evidence from the Deferred Action for Childhood Arrivals program

This paper examines the housing tenure choices of unauthorized immigrants following the largest immigration policy change in recent years. Our identification strategy exploits the discontinuity in eligibility criteria of the 2012 Deferred Action for Childhood Arrivals (DACA) program, which provides a renewable two-year reprieve from deportation and work authorization to eligible immigrants. We estimate a difference-in-differences model that compares eligible with ineligible individuals before and after the program's implementation. Our results indicate that DACA eligible household heads become more likely to be homeowners. Thus, DACA increases access to not only the US labor market but also the benefits of homeownership.

A Study on Changes in Housing Tenure Choice Decisions and Effects of Housing Tenure on Childbirth of Newly-married Households

A Study on Changes in Housing Tenure Choice Decisions and Effects of Housing Tenure on Childbirth of Newly-married Households

Housing debt and elderly housing tenure choices

AbstractWe examine the impact of financial leverage, measured by the loan‐to‐value (LTV) ratios , on elderly homeowners' mobility and housing tenure choices. Using a 1999–2019 sample from the Panel Study of Income Dynamics (PSID), we find that a higher LTV ratio substantially increases an elderly homeowner's likelihood of exiting homeownership. In particular, elderly homeowners with an LTV ratio greater than 80% are more than four times likely to exit homeownership than their debt‐free counterparts. By distinguishing recent leverage changes either from house price movement or from equity extraction/injection, we further find that the impact of financial leverage is path‐dependent. Holding the LTV ratio constant, elderly homeowners are less likely to depart from homeownership if they recently extracted equity from their homes. In addition, we find both financial constraint and long‐term indebtedness are important in predicting the likelihood of elderly homeowners exiting homeownership. We further extend our analysis by exploring the effect of the housing market cycle and find the relationship between financial leverage and elderly tenure choices varies across different stages of the cycle. Our findings have several important implications. They not only point to a linkage between housing and mortgage/rental markets but also help to explain the limited size of the U.S. reverse mortgage market.

Stimulating Housing Policy and Housing Tenure Choice: Evidence from the G7 Countries

Stimulating Housing Policy and Housing Tenure Choice: Evidence from the G7 Countries

Young Australians living with parents: free and pay board as popular housing tenure choices

Young adults staying with parents is definitely a growing housing tenure in Australia. This paper, for the first time, unearths individual-level housing tenure choices of young Australians from the household-level data of owning/renting from the 2017 Household Income and Labour Dynamics in Australia survey. In addition to owner-occupation and private rental, the paper explores the influence of personal characteristics on two types of multigenerational co-residence: young adults who live with parents rent-free and pay board. The results show that, in Australia, young women are more independent in their housing tenure choices (i.e., owning and renting) in comparison to young men. There is a growing trend towards mature and high-earning young people living with parents for free, which might be explained by the aim of saving money to buy a house or investment property and also care arrangements for their elderly parents. Marital status has also a significant effect on housing tenure choices. Never married young adults prefer to live with parents either for free or pay board; while those divorced/separated or widowed prefer to rent privately to maintain their residential independency, after life circumstances changed. This study informs policy makers to provide more support to young adults in a fully or partly independent housing tenure (renting and paying board) in assisting them to climb up the housing career ladder—becoming a homeowner.

Hukou status, housing tenure choice and wealth accumulation in urban China

In Chinese cities, migrants with rural hukou, compared to residents with local urban hukou, face more uncertainty, have limited access to mortgage finance, and are less eligible for low-cost housing. A simple model demonstrates that for these reasons, rural-to-urban migrants are less likely to own housing units in cities and as a result accumulate less wealth. Our empirical analysis examines a nationally representative household survey from 2013 and uses mother's hukou status as an instrumental variable. We find that household heads with rural hukou are about 20 percentage points less likely to own housing units in cities than comparable household heads with local urban hukou. Consequently, the average household head with a rural hukou owns 315 thousand yuan less housing wealth and 226 thousand yuan less total wealth than comparable household heads with local urban hukou. The average household head with a rural hukou has 288 thousand yuan less in housing capital gains than comparable household heads with local urban hukou. Moreover, we find that these differences are much larger in the first- and second-tier cities, cities with more stringent hukou regulations, and among younger cohorts.

HOUSE PRICES, RENTAL COSTS, AND MORTGAGE INTEREST RATES

Studies have typically adopted the price-rent ratio to determine whether housing exuberance exists and the periods of imbalance between house prices and rental costs. Using the price-rent ratio to conduct tests without considering the effects of mortgage interest rates on user costs may overestimate episodes of exuberance. This study uses data of the overall housing market and those of 10 major metropolitan statistical areas (MSAs) in the United States from 1979Q1 to 2018Q1 to evaluate whether housing exuberance exists in the markets; the results indicate that all the MSAs experienced episodes of exuberance at different times and the overall housing U.S. market was overheated from 1998Q2 to 2007Q3. By considering mortgage rates and using the user-cost-rent ratio, we further determine that short-term housing exuberance emerged in only two MSAs, Los Angeles and Miami, in 2006Q2, which was followed by immediate corrections. Thus, the research results of this study signify that only use the price-rent ratio to determine whether or not rational housing tenure choice made by traders exists is not sufficient. This study provides evidence showing that the method incorporating mortgage interest rates tends to obtain an equilibrium relationship between the rental and housing markets, indicating interest rates play an important role in housing tenure choice.

The Effect of Household Debt and Wealth on Subsequent Housing Tenure Choice

The purchase of a home is the largest investment made by most American families, and home equity is the largest component of family wealth. Scholars have long documented the social and economic merits of homeownership and explored the factors that influence access to it. However, despite the abundance of literature on homeownership and housing tenure choice, we lack a study that focuses on whether and how debt and wealth influence a household’s decision to own or rent a home. Using 2004 and 2008 panel data from the Survey of Income and Program Participation (SIPP), this study attempts to identify the causal effect of household debt and wealth on a household’s decision to change tenure choice by examining what factors influence transition from homeowner to renter or from renter to homeowner. Data analysis shows that household secured debt, household wealth, and household income play a significant role in household’s change in tenure choice. While race is not a significant factor influencing the likelihood of a homeowner transitioning to a renter, it was a significant factor for a renter transitioning to a homeowner. Minority renters are significantly less likely to become homeowners compared with white renters, even when controlling for wealth and debt.

Retirement Age and Housing Consumption: The Case of South Korea

South Korea became an aging society in 2000 and will become a super-aged nation in 2026. The extended life expectancy and earlier retirement make workers’ preparation for retirement more difficult, and that hardship might lead to poorer living conditions after retirement. As annuity payments are, in general, not enough for retirees to maintain their previous standard of living after retirement, retired households would have to liquidate their financial and real assets to cover household expenditures. As housing takes the biggest share of households’ total assets in Korea, it seems to be natural for retirees to downsize their houses. However, there is no consensus in the housing literature on housing downsizing, and the debate is still ongoing. In order to understand whether or not housing downsizing by retirees occurs in Korea, this paper examines the impact of the timing of retirement on housing consumption using an econometric model of housing tenure choice and the consumption for housing. The results show that the early retirement group living in more populated region does not downsize the house, while the timing of retirement is negatively associated with housing consumption for the late retirement group living in the peripheral region.

International Real Estate Review

This paper develops a theoretical model for equilibrium rent-to-price ratios from the competition between households and investors in the housing market. Households make their housing tenure choice in terms of rent vs. buy such as minimizing the cost of occupying a housing unit. On the other hand, investors choose between investing in rental housing vs. other investment opportunities in order to maximize their net present value. In the face of limited housing inventory, households and investors bid against one another which determines the allocation of the housing units among households (owner occupied properties) and investors (rental properties). We derive the sensitivity of the equilibrium rent-to-price ratio with respect to various market parameters, and subsequently analyze their potential impacts on the homeownership rate in the community. We show that some government mortgage programs subsidize homeownership to increase the affordability of owning a house, but may also provide even more incentive to the housing investors. Unless the government can effectively control the eligibility of borrowers, such affordable mortgage programs could work against their objectives and lead to higher housing prices and lower homeownership rates. Our model framework can be used to analyze the potential impacts of some of the new affordable housing policies on house prices or homeownership rates before adopting them.