This paper asks the question: What effects (if any) do beliefs in the benefits of homeownership have on individual decisions about buying and renting housing? The objective of this research is to test whether a relationship exists between beliefs in the benefits of homeownership and stated tenure decisions, given a set of conditions about the individuals holding those beliefs. The analysis presented in this paper is based on a conceptual model that combines what is known about determinants of tenure decisions from prior research, and what is presumed about the relationship between beliefs and decisions, based on two existing frameworks of decision-making processes: behavioral economics and the Theory of Planned Behavior. Behavioral economics starts from the same utility maximizing principle as neoclassical economics, but relaxes the assumptions about perfect and unbiased information, and instead allows for additional social, cognitive, and environmental influences on consumer decisions. The Theory of Planned Behavior, meanwhile, suggests that beliefs and attitudes are the primary drivers of intentions to perform behaviors, which in turn predict whether actual actions are taken. These theories thus support the proposition that beliefs can influence tenure decisions, and inform the hypothesis that individuals who hold strong positive beliefs in the benefits of homeownership will be more likely to want to own rather than rent their housing.

To operationalize this conceptual model, this research uses data from the 2011 Fannie Mae National Housing Survey (NHS), a cross-sectional survey of a nationally representative pool of households. The subsample selected for this analysis includes renters who were 25-64 years old at the time they were surveyed, and who expected to change residences at some point in the future. The data are analyzed using logistic regressions that test whether respondents who believe owning is better than renting for financial reasons, or that rate a set of non-financial outcomes as major reasons to buy a home, are more likely than those who do not hold such views to expect to own in the future, even after accounting for their socio-demographic conditions and personal experiences. The results of the analysis lend strong support for the proposition that beliefs can influence decisions about owning and renting housing, and the hypothesis that individuals holding strong beliefs in the benefits of homeownership have greater intentions to buy homes in the future. Indeed, such beliefs are even more indicative of tenure intentions than some personal characteristics, such as race and family composition. Moreover, belief-driven preferences for homeownership appear unaffected by renters’ financial circumstances and self-perception of their ability to qualify for a mortgage. These findings validate the conceptual model developed for this analysis, and demonstrate the importance of behavioral factors to tenure decisions. They also suggest that future research should do more to account for behavioral factors in studies of tenure decisions.