A Conceptual Model of the Household's Housing Decision–Making Process: The Economic Perspective

Abstract

At some stage in every household's family life cycle, the household is likely to make certain decisions with regard to its housing environment. Although the household's housing decisions essentially comprise the decision to move, and the selection of a new residence, the process from which these decisions are derived is very complex because varying circumstances could produce a multitude of different housing decisions. Due to the sheer complexity of the household's housing decision-making process, researchers have generally focused on individual decision-making stages rather than on the process as a whole. This paper therefore attempts to conceptualize the entire household housing decision-making process using theoretical concepts from the economic perspective, and then tests the conceptual model with empirical evidence drawn from the moving population within the multi-racial society in Singapore.

Residential mobility and location choice: a nested logit model with sampling of alternatives

“…Few studies have, however, explicitly modeled these closely related decisions together; one example used a stated preference approach (Kim et al 2005). None, to the best of the authors' knowledge, has modeled residential mobility and location choice jointly in a hierarchical structure using revealed preference data, even though these two parts of the housing decision process are most likely interdependent (Wong 2002). Households may partly base their decision to move from or stay at a current location on the price and quality of the available alternatives (Clark and Onaka 1983).…”

Competing Notions of Search for Home: Behavioural Economics and Housing Markets

“…The analysis is applied to five models of housing search. These models have been selected as examples of the range of perspectives from neoclassical economics (Tu & Goldfinch, 1996) through four variations of behavioural economics models presented chronologically: Speare, Goldstein and Frey (1975); Maclennan (1982); Wong (2002);and Marsh and Gibb (2011). Tu and Goldfinch's (1996) work represents a neoclassical model of housing search, but is interesting in this context as it discusses behavioural economics, and explores some of the assumptions of neoclassical economics explicitly.…”

“…A household creates a shortened list of preferred housing attributes, against which opportunities are evaluated. The stages of the decision require ranking of preferences, evaluating alternatives against set preferences and feedback loops (Wong, 2002). This approach, intended to be procedurally rational, includes the types of decision inherent in the standard economic approach, and similar forms of decision-making (e.g.…”

“…Whilst all conceptual models are simplifications and abstractions, Wong's (2002) model takes incompatible elements of both satisficing and neoclassical economics approaches, and therefore lacks an internally consistent explanation of human ability, the search process and the housing market. One example of this is her treatment of the decision to select a new residence or improve a current residence, which is arguably the insertion of a binary option where one does not exist.…”

Hurdles or walls? Nativity, citizenship, legal status and Latino homeownership in Los Angeles

“…An indicator tapping into neighborhood collective efficacy is included in the analyses. 9 Contextual characteristics connected with the likelihood of homeownership in previous work include racial/ethnic/nativity composition (Borjas, 2002;Burr et al, 2011;DeSilva and Elmelech, 2012) and housing prices/housing costs (Krivo, 1995;Wong, 2002;Dawkins, 2005;Burr et al, 2011;Yu and Haan, 2012). Two census-tract level indicators are entered in the analyses: percent Latino and median home prices.…”