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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.

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File URL: http://www.econ.kuleuven.ac.be/ew/academic/econover/Papers/wplclog.pdf
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Bibliographic Info

Paper provided by Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Working Group Public Economics in its series Public Economics Working Paper Series with number wplclog.

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Length: 12 pp.
Date of creation: 2003
Date of revision:
Publication status: Forthcoming in revised form in Applied Economics Quarterly, Vol. 51, issue 4 (2005).
Handle: RePEc:wpe:papers:wplclog

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Keywords: homeownership; life cycle; transaction tax;

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References

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  1. Luigi Guiso & Tullio Jappelli, 1999. "Private Transfers, Borrowing Constraints and the Timing of Homeownership," CSEF Working Papers 17, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
  2. 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.
  3. Avner Bar-Ilan & Alan S. Blinder, 1987. "The Life-Cycle Permanent-Income Model and Consumer Durables," NBER Working Papers 2149, National Bureau of Economic Research, Inc.
  4. 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.
  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. Dougherty, Ann & Van Order, Robert, 1982. "Inflation, Housing Costs, and the Consumer Price Index," American Economic Review, American Economic Association, vol. 72(1), pages 154-64, March.
  7. 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.
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Cited by:
  1. 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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