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An Intertemporal Empirical Analysis of the Renter's Decision to Purchase a Home
Author(s) -
Ihlanfeldt Keith Ray
Publication year - 1980
Publication title -
real estate economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.064
H-Index - 61
eISSN - 1540-6229
pISSN - 1080-8620
DOI - 10.1111/1540-6229.00211
Subject(s) - renting , economics , panel study of income dynamics , econometrics , value (mathematics) , order (exchange) , marginal value , demographic economics , microeconomics , statistics , mathematics , finance , political science , law
In recent years a controversy has developed regarding the responses of different types of families to increases in the relative cost of homeownership. In order to provide evidence on this question, this study employs samples of renters from the Panel Study of Income Dynamics to estimate the marginal probability of home purchase and the conditional expectation of the house value to income ratio. These cross‐section estimations are performed for two separate time periods: 1968–70 and 1974–76. Among the conclusions reached (by analyzing intertemporal changes in predicted purchase probabilities and value to income ratios) are (1) that first‐time homebuyers have not stretched their housing budgets in response to inflationary expectations, and (2) that the probability of purchase by many of these families has declined over time, especially at low income levels.