Young adults with difficulties finding affordable housing have increasingly been choosing to rent in the private sector and share housing with unknown individuals. Shared living arrangements allow these young single tenants to reduce their housing expenses while enjoying a shared lifestyle that encourages social interaction with a diverse group of housemates. However, physical proximity does not guarantee social proximity, as people may encounter undesirable housemates. Using a rich dataset of shared housing tenancies in Shanghai, China, this study examines how the characteristics of housemates influences tenants’ decision to terminate their shared housing tenancy before its expiration. Our results show that the similarity of housemates in age, gender, occupation, and birthplace reduces the probability of an early termination of the shared tenancy. The impact of housemate similarity measured in the four dimensions is further augmented by tenants’ bargaining power and individual characteristics. Since early tenancy termination increases the vacancy rate in shared housing, sharing with undesirable housemates incurs significant social costs. This study sheds light on how residents living in proximity can share urban space effectively to facilitate sustained shared housing tenancies and suggests the need for policy solutions that are tailored to the needs of shared housing renters.
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