Like any examination of people and their decisions, there are many factors, and the weight given to individual factors varies from person to person...I would posit that most people take an aggregate of what they desire in terms of physical demands (size, location, type of housing) and weigh that against cost, and whatever other outside requirements. Whatever they determine meets their needs sufficiently wins.
When you analyze them, so-called personal "choices" are largely pre-determined by the socio-economic environment we find ourselves in. For example, few people ultimately make the "choice" to go to university, or start a family, or choose the place they work, or marry someone from the same socio-cultural background. If there are choices available it is between two or three candidates among a small range of possibilities, rather than from an infinite number of diverse possibilities.
Choosing a place to live is no different and is, indeed, a product of these constraints. When I was looking for a place to live in Toronto several years ago, it was inevitable that I would have ended up living where I did, off the Danforth on Broadview. For starters, I knew someone living in the apartment tower so I had some confidence in the building (the fear of negligent landlords is, in a sense, a limiter of choice); secondly, being a university-educated, young, single, knowledge economy worker put me in a frame of mind where I felt I had earned the access to certain levels of material comfort while simultaneously confronting the realities of my paycheck. Of course, it's easy to be critical about such a subjective value-judgment, but we're all guilty of doing this at least once in our lives. Finally, there is the reality that when you look for a place to live you are restricted to what is actually available on the market.
When it comes to making choices in a free market we are like chess pieces on a board. From a game-perspective, there are an almost infinite combination of moves and the end of the game can take place under an infinite number of possibilities. But as individual chessmen, we are severely bounded by the rules of the game and can only move in a very finite number of ways across the board.