Develops a theoretical model of the housing market capable of incorporating a wide range of housing characteristics, and subjects the theory to an empirical test. To obtain a more realistic theory of housing markets than can be found in the literature, the analysis is placed within the context of hedonic price theory, which is used to derive a set of empirically estimable functions giving the probability that a house with a certain set of characteristics will be occupied by a household of a specified type. A wide variety of propositions can be tested: the effect of accessibility, lot and structure size, neighborhood quality, racial segregation, and the quality of local public services on the behavior of households categorized. The empirical model is applied to a sample of households in the San Francisco metropolitan area. The results provide a strong confirmation of the validity of the model.