May 29, 2014

Believing in Homeownership: Behavioral Drivers of Housing Tenure Decisions

Rachel Bogardus Drew

W14-3: While numerous studies have sought to identify determinants of individual decisions about owning and renting housing, very few have considered the role that behavioral factors play, particularly in the United States. This paper fills this gap in the literature, using recently collected survey data on beliefs about the benefits of homeownership to analyze their relationship with renters’ stated intentions to buy or rent housing in the future. The analysis finds that such beliefs are strong indicators of expectations to own, more so than even some economic and socio-demographic characteristics that are commonly assumed to drive tenure preferences, such as family composition and income.  Individuals’ perceptions about constraints on their ability to purchase and own homes, meanwhile, are not generally predictive of future tenure intentions. These findings suggest that future research on tenure decisions should do more to account for behavioral factors.

Category: Working Papers

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