Budget-constrained residential preferences differ from unconstrained residential preferences if residents mentally devalue
unaffordable attributes’ levels of available homes in comparison with
affordable ones. Budget-constrained and unconstrained utilities of 70
recent-mover respondents in Saskatoon SK in 1987 and 74 inner-city respondents
in Windsor ON in 2020 are quantified for 12 generic attributes of homes in
conjoint choice experiments. Budget constraints on their utilities for homes’
attributes’ levels are operationalized by superimposing marginal implicit
prices from a hedonic housing price model in each city. Residential utilities
are then statistically compared both through time and for subsamples within
full samples, and losses of utility are predicted. Respondents will experience
an approximate one-quarter and one-tenth loss of possible utility for a home in
Saskatoon and Windsor, respectively, if they cannot afford their unconstrained
most preferred attributes’ levels. Losses of utility are predicted even though
budget-constrained utilities of subsamples of respondents are higher as
hypothesized for affordable levels of four attributes, and lower for
unaffordable levels of those attributes. In conclusion, theoretical and
practical implications of these predictions of losses of residential utility
are discussed for residents, housing providers and policymakers.
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