Structural Estimation of Residential Mobility and Housing Tenure Choice*

This study is devoted to studying households'decisions to move and whether to rent or own after moving. It employs dynamic discrete choice models which condition households'decisions on their circumstances at every point in time during the length of the observation while accounting for individual heterogeneity. The results show that key dynamic elements, captured by means of lagged dependent variables, as well as household heterogeneity, are significant determinants of the tenure choice and mobility decisions. Moreover, homeowners are found to be responsive to housing market conditions when adjusting their housing stock. Housing‐price appreciation is found to discourage renters from becoming homeowners. Finally, our results reject the proportional monetary transaction costs specification suggesting that monetary transaction costs might be fixed.