Which statement best describes how housing tenure and price elasticity influence urban land-use patterns?

• A. Tenure types affect investment and location choice; price elasticity determines how sensitive demand is to price changes, influencing density and sprawl.
• B. Density is fixed regardless of price.
• C. Tenure types have no influence on where people live.
• D. Price elasticity only affects rural land use.

Answer: (A)

The way people own or rent their housing and how strongly housing demand reacts to price changes together shape where housing is built and how densely land is used. When people own homes, they often make longer-term investments in their neighborhoods and prefer stable locations, which can influence where development occurs and how intensively an area is used. Tenants, being more mobile, may respond differently to changes in price or policy, leading to distinct location choices and land-use outcomes.

Price elasticity shows how sensitive housing demand is to price shifts. If demand is highly price elastic, even small price increases can lead to large drops in demand, pushing development toward cheaper peripheries and encouraging sprawl, while potentially lowering core density. If demand is inelastic, price changes don’t reduce demand much, which tends to keep pressure on denser, higher-value locations near amenities. So tenure types set investment and location incentives, and price elasticity governs how these incentives translate into density versus sprawl.