Owner-occupied Housing Research Articles

Owner-Occupied Housing: Life-Cycle Implications for the Household Portfolio

The paper constructs a model of optimal portfolio allocation incorporating the role of housing as collateral. Current house value is a state variable in the portfolio decision due to a nonconvex adjustment cost. Holding risk aversion constant, the percentage of the portfolio held in stocks is decreasing in the ratio of house value to net wealth; thus an older household with a lower ratio of house value to net wealth will generally hold more its portfolio in stocks than younger households. Empirical results using the Survey of Consumer Finances confirm the quantitative and statistical significance of the housing state variable.

House Purchase Versus Rental in Spain

One of the most salient feature of the Spanish housing market, compared to other European economies, is its relatively low rental share. This may be partly attributed to the existence of fiscal distortions in Spain favoring ownership. In this paper, we simulate the potential efects of different policy measures aimed at homogenizing the fiscal treatment of ownership and renting and improving the efficiency of the rental market. We do so in the context of a DSGE model featuring a market for owner-occupied and rented housing, as well as collateral constraints in loan markets. We find that eliminating the existing subsidy to house purchases, introducing a comparable subsidy to rental payments or increasing the efficiency in the production of housing rental services raise the rental share by a similar amount. However, their implications in terms of the construction sector differ.

Does City-Subsidized Owner-Occupied Housing Improve School Quality?

Problem: Policymakers and community development practitioners view increasing subsidized owner-occupied housing as a mechanism to improve urban neighborhoods, but little research studies the impact of such investments on community amenities. Purpose: We examine the impact of subsidized owner-occupied housing on the quality of local schools and compare them to the impacts of city investments in rental units. Methods: Using data from the New York City Department of Education (DOE) and the New York City Department of Housing Preservation and Development (HPD), we estimate three main sets of regressions, exploring student characteristics, school resources, and school outcomes. Results and conclusions: The completion of subsidized owner-occupied housing is associated with a decrease in schools’ percentage of free-lunch eligible students, an increase in schools’ percentage of White students, and, controlling for these compositional changes, an increase in scores on standardized reading and math exams. By contrast, our results suggest that investments in rental housing have little, if any, effect. Takeaway for practice: Policies promoting the construction of subsidized owner-occupied housing have solidified in local governments around the country. Our research provides reassurance to policymakers and planners who are concerned about the spillover effects of subsidized, citywide investments beyond the households being directly served. It suggests that benefits from investments in owner occupancy may extend beyond the individual level, with an increase in subsidized owner-occupancy bringing about improvements in neighborhood school quality. Research support: None.

The Relationship between Residential Foreclosures, Race, Ethnicity, and Nativity Status

Existing research indicates that minority homeowners are more likely to experience a foreclosure than a white borrower, but despite the importance of immigrants to the owner-occupied housing market, no research has examined the relationship between nativity status and foreclosure. Using a unique data set and binomial logistic regression models, this article examines the relationship between race, ethnicity, nativity status, and foreclosure for a sample of households in Minneapolis, Minnesota. Research results indicate that the relationship between nativity status and foreclosure differs by the race and ethnicity of the household and whether the mortgage was refinanced or for a home purchase.

Why Is Taiwan’s Homeownership Rate So High?

With an annual growth rate of 0.62 per cent since 1980, Taiwan’s homeownership rate reached 88 per cent in 2007. This study explores possible causes of Taiwan’s high homeownership rates. The institutional and economic context for tenure choice in Taiwan is reviewed, paying particular attention to the taxation and financing of owner-occupied housing, house prices relative to rents, housing subsidies and housing demand. A model of tenure choice is estimated and then used to simulate policy and other changes. It is concluded that Taiwan’s high rate of homeownership is due primarily to the low user cost of owner-occupied housing, which is due in part to house price inflation. Government mortgage subsidy policies designed to support ownership appear to have little effect.

The Variegated Landscape of Local Immigration Policies in the United States

Hundreds of municipalities and counties across the United States have proposed or implemented immigration policies at the local level, ranging from "sanctuary" policies to those designed to exclude undocumented immigrants. Data collected on these policies are presented, and statistically analyzed at the municipal level to interrogate existing hypotheses about factors driving these policy decisions. Municipalities experiencing rapid growth of their foreign-born population and with a high percentage of owner-occupied housing are more likely to introduce exclusionary policies, whereas municipalities with better educated populations are more likely to adopt inclusionary policies. The location of municipalities in the U.S. South and outside central cities is also associated with exclusionary policies. Textual analysis of policy documents for selected municipalities provides insight into why similarly located places adopt contrasting policies. Local ordinances reflect contrasting local imaginaries of race, nation, and place.

Owner-Occupied Housing as an Investment, Regional House Price Cycles and Residential Sorting

We develop a dynamic multi-region model, with ‡uctuating regional house prices, where an owner-occupied household’s location choice depends on its current wealth and its current type and involves both consumption and investment considerations. The relative strength of the consumption motive and the investment motive in the location choice determines the equilibrium pattern of residential sorting, with a strong investment (consumption) motive implying sorting according to the type (wealth). The model predicts a negative relation between the size of house price ‡uctuations and the degree of residential sorting in the type dimension. Also, movers should be more sorted than stayers in the type dimension. These predictions are consistent with evidence from US metropolitan areas when income, education and age are used as proxies for household type.

Price and Income Elasticity of Australian Retail Finance: An Autoregressive Distributed Lag (ARDL) Approach

This paper models the price and income elasticity of retail finance in Australia using aggregate quarterly data and an autoregressive distributed lag (ARDL) approach. We particularly focus on the impact of the global financial crisis (GFC) from 2007 onwards on retail finance demand and analyse four submarkets (period analysed in brackets): owneroccupied housing loans (Sep 1985-June 2010), term loans (for motor vehicles, household goods and debt consolidation, etc.) (Dec 1988-Jun 2010), credit card loans (Mar 1990-Jun 2010), and margin loans (Sep 2000-Jun 2010). Other than the indicator lending rates and annual full-time earnings respectively used as proxies for the price and income effects, we specify a large number of other variables as demand factors, particularly reflecting the value of the asset for which retail finance demand is derived. These variously include the yield on indexed bonds as a proxy for inflation expectations, median housing prices, consumer sentiment indices as measures of consumer confidence, motor vehicle and retail trade sales, housing debt-to-housing assets as a measure of leverage, the proportion of protected margin lending, the available credit limit on credit cards, and the All Ordinaries Index. In the long run, we find significant price elasticities only for term loans and margin loans, and significant income elasticities of demand for housing loans, term loans and margin loans. We also find that the GFC only significantly affected the longrun demand for term loans and margin loans. In the short run, we find that the GFC has had a significant effect on the price elasticity of demand for term loans and margin loans. Expected inflation is also a key factor affecting retail finance demand. Overall, most of the submarkets in the analysis indicate that retail finance demand is certainly price inelastic but more income elastic than conventionally thought.

MARRIED WOMEN'S EMPLOYMENT STATUS AND THE ACQUISITION OF FAMILY-OWNED HOUSING

This paper explores the impact of married women's employment status on acquiring family-owned housing. In postwar Japan, as well as in many other societies, home ownership has been strongly linked with the male breadwinner family model. Over the past two decades, however, Japan has undergone a prolonged period of economic decline, leading to a decrease in male breadwinners with stable incomes and a counter increase in wives participating in the labour market. Consequently, wives' employment status has become more definitive in stratifying family households in terms of entering the owner-occupied housing market.

Changes in Income Poverty Over the Post-Apartheid Period: An Analysis Based on Data From the 1993 Project for Statistics on Living Standards and Development and the 2008 Base Wave of the National Income Dynamics Study

This paper compares the level and distribution of income poverty in the 2008 National Income Dynamics Study (NIDS) to that measured in the 1993 Project for Statistics on Living Standards and Development (PSLSD). Attempts are made to make the income variables as comparable as possible across the two surveys. This requires that agricultural income and implied rental income from owner-occupied housing are excluded from the measure of income. The potential bias resulting from these exclusions is also discussed. The paper finds that aggregate poverty fell between 1993 and 2008 and that this result is robust for a wide range of poverty lines. The poverty profile has changed over time, however. Urban poverty has increased significantly, driven largely by increased migration from rural to urban areas. The share of poverty in households where the household head has incomplete secondary education has also increased markedly.

Imputed Rental Income, Taxation and Income Distribution in Finland

In most Western countries, owner-occupied housing is tax-favoured compared with other investments and housing tenure modes. This paper analyses the effects of imputed rental income and its tax treatment on income distribution in Finland. Using household data from the 2004 Wealth Survey produced by Statistics Finland, it is found that imputed rental income has a major effect on homeowners’ well-being as it constitutes on average almost 10 per cent of homeowner households’ disposable income. Furthermore, including imputed rental income in household disposable income decreased overall inequality measured by the Gini index. The tax subsidy resulting from non-taxation of imputed rental income is skewed towards high-income households. However, the effects of a new tax on imputed rental income on overall inequality would depend vitally on the way the increased government tax revenue is transferred back to the households.

Mortgage Contract Decisions and Mortgage Distress: Family and Financial Life-Cycle Factors

The U.S. economy experienced a dramatic rise in the price of owner occupied housing during 1999-2007, and then a precipitous decline from 2007 through 2009. In this paper we utilize data from the Panel Study of Income Dynamics (PSID) during 1999-2009 to study first the factors and borrowing decisions which were related to the run-up and then to see how these diverse positions in owner-occupied housing related to the subsequent difficulties and mortgage distress as of 2009. Our research shows that much of the rise and subsequent difficulties were concentrated among younger and less educated homeowners, and that the difficulties were also concentrated in selected real estate markets where home owners were allocating a substantial share of their income to debt service and other home related outlays such as taxes, utilities, and insurance. This pattern of high costs to support a housing position is interpreted as the result of a speculative price run-up supported by the joint decisions of the homeowners and their lenders. In this process the older population took on more mortgage debt than in prior years and may now have less capacity to support help to other adult family members living outside the home.

Housing Pathway Divergence in Japan's Insecure Economy

The housing system in post-war Japan has consistently driven the growth of the owner-occupied housing sector, where many people have followed a conventional life-course in terms of ascending the housing ladder towards homeownership. Since the 1990s, however, a more insecure economy combined with the reorientation of housing and social policies has led to divergence in people's housing pathways. The conservative nature of public policy has largely been maintained, advantaging middle-class family households in accessing homeownership. However, in response to economic stagnation and within the context of pervasive neo-liberalism, the government has moved sharply towards accentuating the role of the market in providing housing and mortgages. Neo-liberal policies have become more pronounced while conservative institutions have firmly been ingrained in Japan's post-war society. Conventional middle-class families, protected by conservative policies in moving up the housing ladder, have maintained their relatively advantageous positions in the market economy. Neo-liberal policy has especially affected the housing conditions of specific groups who have been beyond the protection of conservative institutions, i.e. unmarried individuals, low-income households and those in unstable employment. The combination of conservative and neo-liberal approaches in policy practices has thus had strong diverging effects on people's housing opportunities. This paper explores the fragmentation of housing paths in Japan's insecure economy with particular reference to transformations in housing and social policies.

Assessing the Gap between Observed and Perceived Inflation in the Euro Area: Is the Credibility of the HICP at Stake?

We find strong econometric support for a break in the relationship between perceived and HICP inflation in the euro area, triggered by the introduction of euro notes and coins in January 2002. The break is fairly homogeneous across individuals with different socio-economic characteristics. We found no support for the thesis according to which perceptions are systematically formed by frequently purchased products. A similar break is found when national CPIs instead of HICPs are used as benchmarks. The role of the non-inclusion of owner-occupied housing in the HICP was negligible. Therefore the credibility of the HICP per se is not at stake.

Is the ‘Shop Around the Corner’ a Luxury or a Nuisance? The Relationship between Income and Neighborhood Retail Patterns

Affluent neighborhoods present a potentially attractive location for retail establishments because of their higher purchasing power and demand for a wide range of specialized goods and services. However, if high income households perceive retail in general – or certain types of retail, such as Big Box stores – as an undesirable use, they may be able to block commercial development through zoning and the political process. In this paper we shed light on these issues by examining the relationship between neighborhood income and several different types of retail presence for 58 large U.S metropolitan areas. We combine detailed data from the National Establishment Time-Series database on retail establishments and employment, by industry category and firm type, with Census data on ZCTA income and demographics. Results indicate that retail density varies with income for certain retail types, such as food service and chain supermarkets and drugstores. In addition, average establishment size increases with income for all retail types. Retail density increases with population density, as expected, and decreases with distance to CBD and with share of owner-occupied housing.

Differential Income Taxation and Household Asset Allocation

This paper empirically investigates the effects of differential income taxation on households' portfolio choice and asset allocation applying a two-stage budgeting model of asset demand to German survey data. The model is structured into the discrete asset choice and the continuous asset choice, and the marginal income tax rate is simulated in a module of income taxation. Households that face relatively higher tax rates are found to have relatively greater demand for tax-privileged assets than households in the lower tax brackets. The higher the marginal tax rate the greater demand is for non-owner-occupied housing, for mortgage repayments, for building society deposits, for stocks, for insurances, and for consumer credits, whereas demand is lower for owner-occupied housing, bank deposits, and bonds.

Shifting East Asian Approaches to Home Ownership and the Housing Welfare Pillar

Despite diversity in market and policy frameworks, late twentieth century housing systems across industrialised economies in East Asia became increasingly focused on facilitating home ownership. Governments became characteristically interventionist in the housing sector, which was assumed to play broad economic, political and welfare roles. Despite the influence of the public sector, housing provision was largely commodified rather than de-commodified. Home ownership was perceived to enhance economic development, social solidarity and the asset base of family centred welfare provision. This view was bolstered by house price increases during an era of rapid economic growth. Expanding owner-occupied housing sectors ostensibly offset underdeveloped citizenship rights and public spending, and stimulated increases in middle-class home-owning households, who were provided an economic stake in ‘developmentalist’ government objectives. The Asian Economic Crisis of 1997/98 however, strongly impacted on property markets across the region leading to increasing divergence in approaches to home ownership and welfare provision. This paper examines housing systems and policy regimes in Japan, Singapore and Hong Kong to illustrate new strategies that have emerged in the twenty-first century that reflect diversifying orientations towards housing policies and property-based welfare.

Kanazawa Seiryo University

The relationships between seismic risk and rental and owner- occupied housing prices in the whole of Japan are examined . The empirical results from hedonic regressions with earthquake risk indices suggest that: (1) earthquake occurrence probability has a significantly negative effect on monthly housing rent, (2) the effect of earthquake probability seems to depend on the characteristics of the individual housing unit (e.g. age of dwelling) for owner-occupied housing, (3) the estimated risk premium is much larger for older buildings, and (4) the share of quake-resistant dwellings in the neighborhood area is significantly and positively related to the housing price of the individual unit. These results suggest that anti-seismic policies that target specific groups of dwellings, such as rental houses and older buildings, help to mitigate welfare loss due to earthquakes.

Do Questions Reflecting Indoor Air Pollutant Exposure from a Questionnaire Predict Direct Measure of Exposure in Owner-Occupied Houses?

Home characteristic questions are used in epidemiological studies and clinical settings to assess potentially harmful exposures in the home. The objective of this study was to determine whether questionnaire-reported home characteristics can predict directly measured pollutants. Sixty home inspections were conducted on a subsample of the 2006 population-based Toronto Child Health Evaluation Questionnaire. Indoor/outdoor air and settled dust samples were analyzed. Mean Fel d 1 was higher (p < 0.0001) in homes with a cat (450.58 μg/g) versus without (22.28 μg/g). Mean indoor NO2 was higher (p = 0.003) in homes with gas stoves (14.98 ppb) versus without (8.31 ppb). Self-reported musty odours predicted higher glucan levels (10554.37 μg/g versus 6308.58 μg/g, p = 0.0077). Der f 1 was predicted by the home’s age, but not by reports of carpets, and was higher in homes with mean relative humidity > 50% (61.30 μg/g, versus 6.24 μg/g, p = 0.002). Self-reported presence of a cat, a gas stove, musty odours, mice, and the home’s age and indoor relative humidity over 50% predicted measured indoor levels of cat allergens, NO2, fungal glucan, mouse allergens and dust mite allergens, respectively. These results are helpful for understanding the significance of indoor exposures ascertained by self-reporting in large epidemiological studies and also in the clinical setting.

Crowd out effects of place-based subsidized rental housing: New evidence from the LIHTC program

Since its inception in 1987, the Low Income Housing Tax Credit (LIHTC) program has ballooned into the largest ever source of subsidized construction of low-income housing in the United States, accounting for one-third of all recent multi-family rental construction. This paper examines the crowd out effects of this increasingly important source of low-moderate income housing. To do so, we analyze the impact of LIHTC construction at three different levels of geography, MSA, county, and 10-mile radius circles. This allows us to employ increasingly extensive geographic fixed effects that help to difference away unobserved factors. Political variables are also used as instruments to further facilitate identification. In all of our models, IV estimates yield substantially greater crowd out than OLS, confirming the endogenous attraction of LIHTC development to areas ripe for new construction. Our most robust IV estimates indicate that nearly 100% of LIHTC development is offset by a reduction in the number of newly built unsubsidized rental units, although the confidence band around this point estimate allows for less dramatic assessments. Additional estimates suggest that LIHTC development has a much more moderate impact on construction of owner-occupied housing, but these estimates are imprecise. Overall, while LIHTC development may well affect the location of low-moderate income rental housing opportunities, our estimates suggest that the impact of the program on the number of newly developed rental housing units appears to be small.