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Quantifying the Decision to Become a First-Time Home Buyer

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  • Richard L. Cooperstein

    (United States Office of Management & Budget, New Executive Office Building, Rm. 9002, Washington, DC 2053, USA)

Abstract

Becoming a first-time homebuyer is quantified in two stages using household data. A renter demand curve is estimated to calculate the consumer surplus gain from moving into housing consumption equilibrium. Probit is used to estimate the probability of becoming a first-time homebuyer. The model suggests that overcoming the transactions cost of buying, and the gain from housing consumption equilibrium are important to the decision. Renting is explained by current housing demand through income and family size. Buying for the first time is explained by factors which reduce transactions costs, such as assets, marital status, and education. Disequilibrium in rental housing consumption is also important. The results further suggest that permanent income is not important to the decision.

Suggested Citation

  • Richard L. Cooperstein, 1989. "Quantifying the Decision to Become a First-Time Home Buyer," Urban Studies, Urban Studies Journal Limited, vol. 26(2), pages 223-233, April.
    • Handle: RePEc:sae:urbstu:v:26:y:1989:i:2:p:223-233
    DOI: 10.1080/00420988920080191
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    Cited by:

    1. Saty Patrabansh, 2015. "The Marginal Effect of First-Time Homebuyer Status on Mortgage Default and Prepayment," FHFA Staff Working Papers 15-02, Federal Housing Finance Agency.
    2. Jacobs, Michael & Savedoff, William D., 1999. "There's More Than One Way to Get a House: Housing Strategies in Panama," IDB Publications (Working Papers) 1890, Inter-American Development Bank.

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