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Homeownership and the life cycle: an ordered logit approach

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  • Bart Capéau
  • André Decoster
  • Frederic Vermeulen

Abstract

This paper presents an ordered logit approach to model the optimal timing of buying a house during the life cycle. The model is applied to three recent Belgian household budget surveys. We find that households postpone homeownership or choose to be lifelong tenant due to an increase of the transaction tax rate, the real interest rate on mortgages and an indicator for the evolution of real house prices. Expenditures on nondurables, on the contrary, have a positive impact on (early) homeownership.

Suggested Citation

  • Bart Capéau & André Decoster & Frederic Vermeulen, 2003. "Homeownership and the life cycle: an ordered logit approach," Public Economics Working Paper Series wplclog, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Working Group Public Economics.
    • Handle: RePEc:wpe:papers:wplclog
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    References listed on IDEAS

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    1. Guiso, Luigi & Jappelli, Tullio, 2002. "Private Transfers, Borrowing Constraints and the Timing of Homeownership," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 34(2), pages 315-339, May.
    2. Goodman, Allen C., 1995. "A Dynamic Equilibrium Model of Housing Demand and Mobility with Transactions Costs," Journal of Housing Economics, Elsevier, vol. 4(4), pages 307-327, December.
    3. King, Mervyn A., 1980. "An econometric model of tenure choice and demand for housing as a joint decision," Journal of Public Economics, Elsevier, vol. 14(2), pages 137-159, October.
    4. Avner Bar-Ilan & Alan S. Blinder, 1988. "The Life Cycle Permanent-Income Model and Consumer Durables," Annals of Economics and Statistics, GENES, issue 9, pages 71-91.
    5. Donald R. Haurin & Patric H. Hendershott & Susan M. Wachter, 1996. "Borrowing Constraints and the Tenure Choice of Young Households," NBER Working Papers 5630, National Bureau of Economic Research, Inc.
    6. repec:adr:anecst:y:1988:i:9:p:04 is not listed on IDEAS
    7. Dougherty, Ann & Van Order, Robert, 1982. "Inflation, Housing Costs, and the Consumer Price Index," American Economic Review, American Economic Association, vol. 72(1), pages 154-164, March.
    8. Mervyn A. King, 1980. "An Econometric Model of Tenure Choice and Demand for Housing as a Joint Decision," NBER Chapters, in: Econometric Studies in Public Finance, pages 137-159, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. A. Decoster & K. De Swerdt, 2006. "Why and How to Construct a Genuine Belgian Price Index of House Sales," Review of Business and Economic Literature, KU Leuven, Faculty of Economics and Business (FEB), Review of Business and Economic Literature, vol. 0(2), pages 309-330.
    2. Ferreira Gonzaga, Jenifer & Vilpoux, Olivier François & Gomes Pereira, Matheus Wemerson, 2019. "Factors influencing technological practices in the Brazilian agrarian reform," Land Use Policy, Elsevier, vol. 80(C), pages 150-162.
    3. Matel Anna, 2021. "Tenure Status in Life Cycle Cohorts in Poland," Real Estate Management and Valuation, Sciendo, vol. 29(3), pages 1-12, September.
    4. ÇAGLAYAN, Ebru & UN, Turgut, 2012. "Heteroscedastic Probit Model: An Application Of Home Ownership In Turkey," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 12(2).

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    More about this item

    Keywords

    homeownership; life cycle; transaction tax;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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