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Current Wealth and Tenure Choice

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  • Lawrence D. Jones

Abstract

This paper argues that a central implication of tenure transition models is that the timing of a household's initial switch to ownership is particularly dependent upon its current net worth. In contrast, permanent income, largely derived from human capital, is assumed to be the dominant component of the relevant household budget constraint in conventional tenure choice models. These contending propositions are tested using a Canadian micro database. Consistent with the tenure transition approach, current nonhuman wealth is found to have the primary budgetary role in tenure mode decisions of young households.

Suggested Citation

  • Lawrence D. Jones, 1989. "Current Wealth and Tenure Choice," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 17(1), pages 17-40, March.
    • Handle: RePEc:bla:reesec:v:17:y:1989:i:1:p:17-40
    DOI: 10.1111/1540-6229.00471
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    1. John F. Kain & John M. Quigley, 1975. "Housing Markets and Racial Discrimination: A Microeconomic Analysis," NBER Books, National Bureau of Economic Research, Inc, number kain75-1.
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