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Comprehensive model of household tenure choice

Author

Listed:
  • Steven C. BOURASSA

    (University of Louisville)

  • Donald R. HAURIN

    (Ohio State University)

  • Patric H. HENDERSHOTT

    (DePaul University and Homburg Academy)

  • Martin HOESLI

    (University of Geneva, Swiss Finance Institute, University of Aberdeen Business School, and Bordeaux Business School)

Abstract

We present a comprehensive model of household tenure choice that allows for the taxation of imputed rental income and capital gains, deductions of mortgage interest and property taxes, subsidies to owners and renters, and borrowing constraints. This model is used to guide our review of the literature that analyzes the impact of country tax and subsidy policies toward housing and to focus our critiques of various methodologies. We discuss the impact of factors such as house price capitalization effects and individuals’ choices of household structure, loan-to-value ratio, and wealth accumulation on the likelihood of homeownership. We argue that the best empirical studies are ones that use panel household-level data and have access to a large set of measures of housing taxes and subsidies, macroeconomic variables, and household characteristics. We conclude with a review of three studies that illustrate the benefits and challenges of modeling the homeownership decision across countries.

Suggested Citation

  • Steven C. BOURASSA & Donald R. HAURIN & Patric H. HENDERSHOTT & Martin HOESLI, 2011. "Comprehensive model of household tenure choice," Swiss Finance Institute Research Paper Series 11-49, Swiss Finance Institute.
  • Handle: RePEc:chf:rpseri:rp1149
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    More about this item

    Keywords

    Homeownership; Demographics; Tenure Choice; Housing Policy; Costs of Owning and Renting; Borrowing Constraints;
    All these keywords.

    JEL classification:

    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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