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Modeling Real Estate Investment Decisions In Households

Author

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  • André de Palma

    (X-DEP-ECO - Département d'Économie de l'École Polytechnique - X - École polytechnique - IP Paris - Institut Polytechnique de Paris, ENS Cachan - École normale supérieure - Cachan)

  • Matthieu de Lapparent

    (IFSTTAR/AME/DEST - Dynamiques Economiques et Sociales des Transports - IFSTTAR - Institut Français des Sciences et Technologies des Transports, de l'Aménagement et des Réseaux - Communauté Université Paris-Est)

  • Nathalie Picard

    (X-DEP-ECO - Département d'Économie de l'École Polytechnique - X - École polytechnique - IP Paris - Institut Polytechnique de Paris, THEMA - Théorie économique, modélisation et applications - UCP - Université de Cergy Pontoise - Université Paris-Seine - CNRS - Centre National de la Recherche Scientifique)

Abstract

There is substantial literature on modelling individual residential location choices. We restrict here our attention to some key aspects discussed below, which remain overlooked in the litterature. First, the set of decisions related to residential location in a multiperiod setting typically involve a very large number of alternatives. At a given date, a choice entails several dimensions: where to locate, which dwelling types and which tenure status. A fine tuned demand analysis of housing choices, would consider dozens of small geographical units for potential locations, at least two tenure types (own or rent) and at least two dwelling types (apartment or house). Another aspect is: who makes residential location related decisions. Recent litterature (see Picard & Chiappori (2011), de Palma et al. (2013)) shows that accounting for intra-household negotiation processes provide a new understanding about how residential location choices may result from consensus reached by household members. Most of research work is yet based on unitary household approaches that consider there is a single decision maker in the family.

Suggested Citation

  • André de Palma & Matthieu de Lapparent & Nathalie Picard, 2014. "Modeling Real Estate Investment Decisions In Households," Working Papers hal-01091972, HAL.
    • Handle: RePEc:hal:wpaper:hal-01091972
    Note: View the original document on HAL open archive server: https://hal.science/hal-01091972
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    References listed on IDEAS

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    1. de Palma, Andre & Picard, Nathalie & Waddell, Paul, 2007. "Discrete choice models with capacity constraints: An empirical analysis of the housing market of the greater Paris region," Journal of Urban Economics, Elsevier, vol. 62(2), pages 204-230, September.
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    Keywords

    Residential location; Real estate; Investment; Optimization; Dynamic model; Bequest; Financial constraints; Discrete choice models; Economics of the family;
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