NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Economics of Tenure Choice: 1955-79

Patric H. Hendershott, James D. Shilling

NBER Working Paper No. 543
Issued in September 1980
NBER Program(s):   PE

The aggregate homeownership rate in the United States has continued to rise throughout the 1970s despite rising inflation and the rapid growth of young and primary individual households with relatively low homeownership rates. This appears to be a result of a decline in the cost of homeownership relative to renting. The post 1965 decline in the real after-tax interest rate has acted to reduce the costs of both types of housing. However, inflation, and legislation induced increases in taxation of rental housing have largely offset the decline in the net real financing rate. Depreciation is based on historic cost and nominal capital gains are taxed. Moreover, this taxation was increased in 1969 and 1976 with the introduction and expansion of the minimum tax, the increased recapture of accelerated depreciation, and the amortization, rather than expensing, of construction period interest and property taxes. The decline in the cost of owner-occupied housing relative to rental housing is estimated to have sharply increased homeownership. In the absence of this decline 4.5 to 5 million fewer households would have been homeowners at the end of 1978. That is, the homeownership rate would have been 60 percent, rather than 65 percent.

download in pdf format
   (512 K)

email paper

This paper is available as PDF (512 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w0543

Published: Hendershott, Patric H. and Shilling, James D. "The Economics of Tenure Choice: 1955-79." Research in Real Estate, Vol. I, pp. 105-133. Greenwich, CT: JAI Press, 1982.

Users who downloaded this paper also downloaded these:
Haurin, Hendershott, and Wachter w5630 Borrowing Constraints and the Tenure Choice of Young Households
Hendershott and Slemrod w0929 Taxes and the User Cost of Capital for Owner-Occupied Housing
LaFayette, Haurin, and Hendershott w5074 Endogenous Mortgage Choice, Borrowing Constraints and the Tenure Decision
Blackley and Follain w5177 In Search of Empirical Evidence that Links Rent and User Cost
Haurin, Hendershott, and Kim w3310 Tenure Choice of American Youth
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us