A Two-stage Housing Choice Forecasting Model

Abstract

A new housing choice forecasting model is developed here to answer a practical question: how to forecast housing demand at a disaggregate level. Being different from the previous housing choice models, this model is derived from housing sub-market structure based on a random utility approach. Housing choice is thought to be a joint choice of all the components associated with a dwelling, These components create a huge bundle of dwelling alternatives resulting in an empirical calculation problem. To avoid this problem, the model developed in this paper separates the joint choice behaviour into two stages: the choices of the key dwelling components which construct the housing sub-markets and the choices of the non-key dwelling components which distinguish individual dwellings in each housing sub-market. Some policy simulations are presented based on this model.