부산대학교 도서관

We add real option value in housing tenure choice model to examine the relationship between rents and housing user costs as well as the decision making of tenure choices with and without structural break. Unlike previous literature, we find that there exists long-run equilibrium between user costs and rents after considering real options value. A clear structural break in 2007 Q3 or after subprime mortgage crisis also changed the relationship between the two mentioned above. In equilibrium state, we find that real option value exhibits a negative impact on rents and buying a house is preferred over renting; In the other state, the negative impact is on housing user costs and renting is preferred over buying a house. Our findings can help better understand the decision making of tenure choice, promote the formation of reasonable housing prices, and shed light on sound development of the real estate market in Taiwan.