Determinants of Tenure Choices Among Young Households

• Published in: Real Estate Finance Vol. 37; no. 3; pp. 175 - 195
• Main Authors: Seo, Youngme, Lee, Seung Hwan
• Format: Trade Publication Article
• Language: English
• Published: New York Aspen Publishers, Inc 01.01.2021
• Subjects: Borrowing; Couples; Datasets; Decomposition; Demographics; Demography; Down payments; Economic crisis; Family income; Home ownership; Households; Housing; International finance; Maternity & paternity leaves; Tenure; Trends; Young adults
• ISSN: 0748-318X

(ProQuest: ... denotes formulae omitted.) Young households1 homeownership rate has experienced a significant downturn; it has dropped to 36 percent in 2014, nearing the lowest level since 1965.2 There is ample evidence to suggest current young households are foregoing or delaying their pursuit of homeownership relative to preceding young households.3 In the past, leaving the parental home was seen as a rite of passage, a transition into a new class and family formation,4 and homeownership was viewed as a major milestone for young households.5 Today, the pathway to adulthood has become less structured and linear; young people are compelled to react to the dynamic shifts afforded by social and economic trends. [...]investigating how current young households are affected by such dynamic shifts in demographic trends, financial resources, market conditions, and expected mobility is critical in predicting tenure choice. [...]expected mobility is deemed as a key factor in affecting tenure choice due to the different transaction costs associated with various modes of dwelling.14 Particularly for young households, it can be an important criterion before settling down to a permanent residence of choice. Despite the traditional view of homeownership as the most viable path to wealth and a key element to a successful lifestyle package, the current generation of young adults are choosing or ostensibly being excluded from accessing the housing ladder.16 The pessimism surrounding homeownership and tenure decisions among young households continues to grow, instigating concerns among policymakers looking to overcome the barriers of the current and the future housing market. [...]our primary goal is to find major determinants that contribute to explaining the current low homeownership rate among young households. [...]this study paves the way for future research by recognizing the importance of comparing within the generation (current vs. preceding young households).