The influence of family members on housing purchase decisions
| DOI | https://doi.org/10.1108/14635780410550885 |
| Pages | 320-338 |
| Published date | 01 August 2004 |
| Date | 01 August 2004 |
| Author | Deborah S. Levy,Christina Kwai‐Choi Lee |
| Subject Matter | Property management & built environment |
The influence of family members
on housing purchase decisions
Deborah S. Levy
Department of Property, The University of Auckland, Auckland, New Zealand
Christina Kwai-Choi Lee
Department of Marketing, The University of Auckland, Auckland, New Zealand
Keywords Family, Decision making, Influence, Real estate
Abstract Families and households make up a significant proportion of the real estate market.
There is, however, little information in mainstream real estate literature on the impact of family
behaviour on real estate decisions. This paper clarifies some of these issues by analysing and
expanding on many of the findings from the marketing literature, in particular the topic of
influence between different family members in the purchase of a new home. This paper presents
some important issues to be considered when examining family decision-making. These include the
roles played by different family members and their influence at different stages of the
decision-making process. It also reports on the findings of a study involving a series of in-depth
interviews with real estate agents to determine their perception of the family decision-making
process in relation to a house purchase decision. This culminates in a conceptual framework on
family decision making specifically for the purchase of residential real estate, before discussing the
implications of these findings to the general real estate market, including service, promotion and
valuation.
1. Introduction
Traditionally the study of real estate has been based on neoclassical economic theory
that assumes individuals make rational economic decisions with a view to maximising
utility. This is reflected in property valuations which are primarily based on physical
characteristics rather than more intangible non-financial factors which are often
important to the purchasers of real estate (Smith et al., 1992) and thus fail to take into
account behavioural issues and processes. To date, research relating to the behavioural
issues relating to the purchase of residential real estate has largely been confined to
areas such as buyer search duration and location and tenure choice (Anglin, 1997;
Baryla and Zumpano, 1995; Elder and Zumpano, 1991). Generally these studies do not
focus on the dynamics relating to the decision-making process within the family.
Traditional or neoclassical theory in the past has either ignored the family as an
institution or treated it as if it was a single individual or as if the paternal head of the
household personified the family as a whole (Hodgson, 1999). Hodgson (1999) suggests
that the only mainstream attempt to model the family was undertaken by Becker (1976,
1991), however Becker’s model assumed a market where marriage and relationships
are formed under contract. Hodgson (1999) asserts that both traditional t heory and
mainstream attempts have ignored moral, cultural and institutional distinction. The
implication therefore is that different techniques are required in order to explore family
decision-making behaviour.
The study of consumer behaviour within the marketing literature however, has
examined many issues regarding the purchasing behaviour of families. Our belief is
The Emerald Research Register for this journal is available at The current issue and full text archive of this journal is available at
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JPIF
22,4
320
Received January 2002
Accepted December 2002
Journal of Property Investment &
Finance
Vol. 22 No. 4, 2004
pp. 320-338
qEmerald Group Publishing Limited
1463-578X
DOI 10.1108/14635780410550885
that the knowledge gained from this line of research may assist in a better
understanding and prediction of decision-makers’ actions in the real estate market
(Gibler and Nelson, 1998). The focus of this study is, therefore, to determine whether
the extant literature relating to family decision making and family member influence
mirror the decision making process in the purchase of a family home. The purpose is
not to produce definitive conclusions, or to provide generalisable results, but to provide
a basis from which academics and practitioners in real estate can begin to understand
and explore this under-researched area.
Part 2 of the paper examines the extant literature relating to family member
influence in the area of purchase decisions and the implications for real estate purchase
decisions. Part 3 reports on the results of a series of individual in-depth interviews with
experienced real estate agents in the Auckland area. From the review of the literature
and information collected from the interviews a revised model of family decision
making relevant to the real estate purchase decision is proposed. This is followed by a
discussion of the implications to the marketing and valuation of real estate and
explores possible avenues for future research.
2.Family and family decision making
A family is defined as “a group of two or more persons related by blood, marriage or
adoption, and residing together as a household” (Lawson et al., 1996). Since the family
is the crucial decision-making unit, the interaction between family members is likely to
be more significant than those of smaller groups, such as friends or collea gues. Several
studies in family decision making have investigated the relative amount of influence
exerted by family members and their influences at each stage of the decision-making
process (e.g. Ferber and Lee, 1974; Haley, Overholser and Associates, Inc., 1975; Davis,
1970; 1971; Beatty and Talpade, 1994; Na et al., 1998; Lee and Marshall, 1998).
Influence involves actions by family members that make a difference during the
decision process (Beatty and Talpade, 1994). Two major types of influence have been
identified, first, direct influence which is “based directly on the decision maker’s own
needs” (Rossiter, 1978). Second, indirect influence “in which the decision maker takes
another family member’s needs indirectly into account” (Rossiter, 1978).
Figure 1 (adapted from Lee, 1992) presents a conceptual framework of family
decision making as it relates to the purchase of a family home. A brief description of
the characteristics identified in this framework are set out below:
.Family characteristics. These include the family life cycle, social class, sex-role
orientation and culture (these aspects are discussed in the next section of this
paper).
.Situational characteristics. These include the concept of perceived risk and how it
relates to time pressure. Sheth (1974) suggest that the higher the risk perceive d in
a particular purchase decision the more likely it is for the decision to be joint. But,
the greater the time pressure on a family to make a decision the more likely it is
for the decision to be an individual decision.
.Individual characteristics. Many consumer purchasing decisions are made within
a family unit comprising a small group of individuals, who have different
personalities, preferences, interests, and tastes. When this group of individuals
come together to make a decision, it is inevitable that conflict may occur
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