HOUSING DECISIONS OF AMERICAN YOUTH

Prior studies of household tenure choice have not accounted for possible simultaneity with household formation and labor supply decisions. We address these methodological issues and introduce new measures of the relative cost of homeowning and potential earnings capacity. We also estimate the demand for the quantity of owner-occupied housing, accounting for the limitation of the sample to those choosing to live alone and be homeowners. Potential earnings and housing rental costs affect young adults' decisions of whether to live alone (as single or married) or with parents or some other group of adults. Tenure choice is influenced by wealth, the relative cost of homeowning, and a number of demographic variables. Housing demand depends on owner costs (elasticity near -0.5) and potential earnings (elasticity near 0.5). © 1994 Academic Press. All rights reserved.