Determinants of the Homeownership Rate: A Survey of Recent Contributions

36 Pages Posted: 22 Sep 2014

See all articles by Steven C. Bourassa

Steven C. Bourassa

Florida Atlantic University

Donald R. Haurin

Ohio State University (OSU) - Economics

Patric H. Hendershott

University of Aberdeen - Aberdeen Business School

Martin Hoesli

University of Geneva - Geneva School of Economics and Management (GSEM); Swiss Finance Institute; University of Geneva - Research Center for Statistics; University of Aberdeen - Business School

Date Written: October 31, 2011

Abstract

This study reviews the literature on the determinants of a country’s homeownership rate including factors such as demographic characteristics, household level economic variables, and government housing policies. We present a comprehensive model of a household’s tenure choice, one that allows for the taxation of imputed rental income and capital gains, deductions of mortgage interest, property taxes, and other expenses, subsidies to owners and renters, and borrowing constraints. This model is used throughout the paper to compare countries’ tax and subsidy policies toward housing and critique various methodologies. We emphasize that homeownership cannot be considered in a static framework. Rather, factors such as house price capitalization effects and households’ choices of household structure, mortgage loan-to-value ratio, and wealth accumulation must be considered. 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. Only in this framework can one study the variations in effects of influential variables on different types of households who live in different locations. We conclude with a review of three such analyses of the variations in homeownership rates across developed countries.

Keywords: homeownership, demographics, tenure choice, housing policy, costs of owning and renting, borrowing constraints

JEL Classification: R31

Suggested Citation

Bourassa, Steven C. and Haurin, Donald R. and Hendershott, Patric H. and Hoesli, Martin Edward Ralph, Determinants of the Homeownership Rate: A Survey of Recent Contributions (October 31, 2011). Swiss Finance Institute Research Paper No. 11-49. Available at SSRN: https://ssrn.com/abstract=1961189 or http://dx.doi.org/10.2139/ssrn.1961189

Steven C. Bourassa

Florida Atlantic University ( email )

777 Glades Road
Boca Raton, FL 33431
United States
5028077642 (Phone)

Donald R. Haurin

Ohio State University (OSU) - Economics ( email )

154 N. Oval Mall
1010G Derby Hall
Columbus, OH 43210-1172
United States
614-292-0482 (Phone)
614-292-9530 (Fax)

Patric H. Hendershott

University of Aberdeen - Aberdeen Business School ( email )

Dunbar Street
Aberdeen AB24 3QY, Scotland
United Kingdom

Martin Edward Ralph Hoesli (Contact Author)

University of Geneva - Geneva School of Economics and Management (GSEM) ( email )

40 Boulevard du Pont d'Arve
Geneva 4, 1211
Switzerland
+41 22 379 8122 (Phone)
+41 22 379 8104 (Fax)

Swiss Finance Institute

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

University of Geneva - Research Center for Statistics ( email )

Geneva
Switzerland

University of Aberdeen - Business School ( email )

Edward Wright Building
Dunbar Street
Aberdeen, Scotland AB24 3QY
United Kingdom
+41 22 379 8122 (Phone)
+41 22 379 8104 (Fax)

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