This issue has raised many discussions among scholars on the factors that influence the tenure decision and whether the decision is rational. Especially such works have become important after several amazing rises in the house prices, which were then followed, but not less amazing falls. In this research I shall try to concentrate on the purchasing a house as an investment decision and try to recapitulate the underlying fundamentals affecting tenure choice in preference for renting or owning.

If to consider housing as an investment, it is necessary to single out the qualities of the

If the consumer owns, then his maximization function is as follows:

investment asset, which any investor will evaluate when making the investment decision. These qualities are the 'divisibility of holdings, security of real capital value and income, volatility of returns, liquidity of capital, the cost of purchase and sale and capital appreciation prospects'1. Thus, the main financial characteristics of an investment are whether the income and capital values are fixed or whether they are variable, and if they are variable, to what is the variation linked.

Even though so many pitfalls when investing in real estate exist, still, according to MARS study in 2003, nearly 71% of American adults own their homes as opposed to renting or other arrangements5. Among married couples, 85% own a home and for households with as low income as below $20,000 still 50% own a house, while for households with incomes $100,000-$150,000 88% own a house. An interesting finding is that for households with incomes above $150,000, a lower amount of households accounting to 86% own a home. Norman Hutchinson in his research claims that households headed by professionals, employers or managers are the most likely to own a house with a mortgage while the unskilled or manual workers are five times more likely to be renting a housing unit6.

The financial return from housing, just like from the majority of other financial assets, takes the form of income or the capital gains or losses. The income for a landlord will be the rents received from tenants, and the income from property for home-owners are the cash outlays that the owner would have paid in renting if not having owned this unit. The capital growth is the change of the housing value due to the inflationary gains or losses or due to the increased/decreased demand for this very property, which will lead to the increase/decrease in the transaction price, which could have been received for it in the market. But, real estate is a long-term holding asset and the 'value gains' are rather 'virtual' due to the fact that the family will not be likely to sell the property as soon as the price goes up just because the price for a alternative substitute property where family will live after the deal will be likely also to go up, releasing the assumption that the property that the family owns is unique.

Some common words found in the essay are:
Estate Cycles', Vw Subject, Peter Linneman, , Lori Taylor, Henderson Ionnides9, Mingche Li13, Henderson Ioannides, Thomas Miceli12, Norman Hutchinson, utilization rates, real estate, home ownership, maintenance costs, investment decision, owning house, utilization costs, utilization rate, marginal cost, housing consumption, = y2 +, y2 + s1+r, investing real estate, commercial retail warehouse, + = y2,
Approximate Word count = 4339
Approximate Pages = 17 (250 words per page double spaced)