Owner-occupied Housing Research Articles

Household-specific housing capital gains and consumption: Evidence from Canadian microdata

This paper analyzes how household consumption decisions respond to accrued capital gains on owner-occupied housing using Canadian microdata. It makes an important methodological contribution by utilizing a hedonic regression approach to estimate household-specific capital gains instead of relying on house-price indices and other proxy measures that have been widely used in earlier literature. The results suggest that household consumption expenditures are increasing in the level of accrued capital gains on housing, and that the sustainability of these gains is important for the magnitude of this relationship. When the level of accrued capital gains is persistent over time, total household consumption increases by approximately 5.4 cents for every dollar of permanent capital gains and non-durable consumption increases by approximately 3.9 cents. Estimates of marginal propensity to consume for households in different age categories and other subgroups are also presented.

Why Not Cash Out Home Equity? Reflections on the Finnish Case

Recently, many governments have sought ways to secure the provision of an adequate level of income for their ageing populations. The notion that citizens themselves should provide a part of their future livelihood is gaining ground in European societies. One possibility is to apply the wealth that individuals have accumulated during their lives. An owner-occupied dwelling is the largest piece of wealth that ordinary households possess. It constitutes an asset that households can transform into money. Banks have developed various financial instruments for households to transform their housing equity into money. However, housing is not a comparable asset to financial investments, such as stocks or shares. Homes have a special meaning for individuals, and this makes a dwelling a special good that cannot be traded at will. This article is based on a qualitative interview study conducted in Finland. We will examine how Finnish homeowners justify their generally negative attitudes towards using housing equity. One of the issues that households face is that by employing financial instruments, they would be remortgaging a debt-free house, and homeowners would find this undesirable. Is there a specific moral aversion to debt? Is the owner-occupied house a “sacred” possession that cannot be cashed out?

A new optimal portfolio selection model with owner-occupied housing

This paper develops a new dynamic optimal portfolio selection model with owner-occupied housing. Such a model has three features: (1) the objective of an agent is to minimize the deviation of her wealth to a certain pre-set financial target by selecting a suitable portfolio strategy; (2) the house price is modeled by a stochastic differential equation with Poisson jump; (3) both full information and partial information are considered. The optimal portfolio strategies with the associated optimal performance functionals are completely and explicitly obtained in terms of some methods arising from stochastic optimal control and backward stochastic differential equation. A numerical example is used to demonstrate the theoretical results.

Homeownership and the scarcity of rentals

The provision of owner-occupied versus rental houses is modeled as a competitive search economy where households have private information over their expected duration. With public information, households with low vacancy hazard rates pay lower rents and search in thicker rental markets. With private information, rentals are under-provided to long-duration households to discourage short-duration households from searching there. Ownership is attractive in part because it cures the private information problem. Using a novel data set of rental listings, we show that homeownership rates are high where rent-to-price ratios are low but rentals are scarce and that long-duration households sort into scarce rental markets. These patterns are consistent with the model only under private information.

Does Social Capital Explain Community-Level Differences in Organ Donor Designation?

The growing shortage of life-saving organs has reached unprecedented levels, with more than 120,000 Americans waiting for them. Despite national attempts to increase organ donation and federal laws mandating the equitable allocation of organs, geographic disparities remain. A better understanding of the contextual determinants of organ donor designation, including social capital, may enhance efforts to increase organ donation by raising the probability of collective action and fostering norms of reciprocity and cooperation while increasing costs to defectors. Because community-level factors, including social capital, predict more than half the variation in donor designation, future interventions should tailor strategies to specific communities as the unit of intervention. The growing shortage of organs has reached unprecedented levels. Despite national attempts to increase donation and federal laws mandating the equitable allocation of organs, their availability and waiting times vary significantly nationwide. Organ donor designation is a collective action problem in public health, in which the regional organ supply and average waiting times are determined by the willingness of individuals to be listed as organ donors. Social capital increases the probability of collective action by fostering norms of reciprocity and cooperation while increasing costs to defectors. We examine whether social capital and other community-level factors explain geographic variation in organ donor designation rates in Massachusetts. We obtained a sample of 3,281,532 registered drivers in 2010 from the Massachusetts Department of Transportation Registry of Motor Vehicles (MassDOT RMV). We then geocoded the registry data, matched them to 4,466 census blocks, and linked them to the 2010 US Census, the American Community Survey (ACS), and other sources to obtain community-level sociodemographic, social capital (residential segregation, voter registration and participation, residential mobility, violent-death rate), and religious characteristics. We used spatial modeling, including lagged variables to account for the effect of adjacent block groups, and multivariate regression analysis to examine the relationship of social capital and community-level characteristics with organ donor designation rates. Block groups with higher levels of social capital, racial homogeneity, income, workforce participation, owner-occupied housing, native-born residents, and white residents had higher rates of organ donor designation (p < 0.001). These factors remained significant in the multivariate model, which explained more than half the geographic variance in organ donor designation (R(2) = 0.52). The findings suggest that community-level factors, including social capital, predict more than half the variation in donor designation. Future interventions should target the community as the unit of intervention and should tailor messaging for areas with low social capital.

Exiting or retaining owner-occupied housing in the United States 1999–2009: How do social programs matter?

This research examines exits from homeownership in the United States between 1999 and 2009 using data from the Panel Study of Income Dynamics. We first document the extent to which homeowners exited owned housing (to a rental unit or a rent-free unit) during that time period. Second, we examine how socio-demographic characteristics, housing characteristics, debt levels, and receipt of public and private transfers are associated with exiting (or retaining) homeownership, with a particular focus on whether transfers counteract earnings decreases and/or housing cost increases to assist homeowners in retaining their homes. We also investigate whether these associations differ for several subgroups of homeowners defined by their location in the income distribution and race. Findings from regression models that include individual, year, and state fixed effects highlight the role of both labor markets and housing markets in influencing exits from homeownership. More generous and universal public transfers (such as OASDI) appear to help owners retain homes, whereas less generous and means-tested transfers do not. At the same time, the influences of universal transfers on retaining a home are small in magnitude compared to those of decreases in earnings and home values as well as increases in payment-to-income and consumer debt-to-income ratios.

Rented vs. Owner-Occupied Housing and Monetary Policy

The aim of this paper is to show how housing tenure (rented vs. owner-occupied) affects monetary policy. In order to do that, I propose a dynamic stochastic general equilibrium model with housing, both owned and rented. First, I analyze how, in the model, preference parameters, fiscal incentives and institutional factors determine the rental market share and the residential debt-to-GDP ratio. Then, within this framework, I study how the transmission and optimality of monetary policy differ depending on these factors. From a positive perspective, impulse responses illustrate differences in the monetary transmission mechanism. In normative terms, results show that when the relative size of the rental market is larger, monetary policy is more stabilizing. An optimal monetary policy analysis also suggests that in this case, monetary policy should respond more aggressively to inflation and disregard output, since the financial accelerator effects are weaker.

How Mortgage Finance Affects the Urban Landscape

This chapter considers the structure of mortgage finance in the U.S., and its role in shaping patterns of homeownership, the nature of the housing stock, and the organization of residential activity. We start by providing some background on the design features of mortgage contracts that distinguish them from other loans, and that have important implications for issues presented in the rest of the chapter. We then explain how mortgage finance interacts with public policy, particularly tax policy, to influence a household's decision to own or rent, and how shifts in the demand for owner-occupied housing are translated into housing prices and quantities, given the unusual nature of housing supply. We consider the distribution of mortgage credit in terms of access and price, by race, ethnicity, income, and over the lifecycle, with particular attention to the role of recent innovations such as non-prime mortgage securitization and reverse mortgages. The extent of negative equity has been unprecedented in the past decade, and we discuss its impact on strategic default, housing turnover, and housing investment. We describe spatial patterns in foreclosure and summarize the evidence for foreclosure spillovers in urban neighborhoods. Finally, we offer some thoughts on future innovations in mortgage finance.

J. Doling and R. Ronald (eds): Housing East Asia: socioeconomic and demographic challenges

This book is a strong addition to comparative housing research. The authors of individual chapters are all recognized experts and several are prominent in the field. Each chapter of the book demonstrates rigorous scholarship. While the first chapter of this book offers a theoretic framework, the rest covers nine major economic bodies in the region with one chapter exclusively devoted to one country/region: mainland China, Taiwan, Hong Kong, Japan, South Korea, Malaysia, Singapore, Indonesia, and Thailand. Housing regimes in East Asia are quite diverse. Nonetheless, they are alike in terms of forms and motivations of government intervention (Chen et al. 2014). The editors of this book, John Doling and Richard Ronald, show in the introductory chapter that national housing systems in East Asia share an important common to use housing development as a means to drive urban development and economic growth. Particularly, the editors elaborate the rationales of why the provision of owner-occupied housing is a pillar of welfare under productivist welfare regimes in East Asia. Through promoting asset-based welfare among homeowners, East Asian governments expect the family asset can function as social security and the building up of ‘‘asset-based security’’ can preserve self-sufficiency and reduce the citizens’ demand to develop onerous and costly welfare states. On one hand, the asset-based welfare philosophy reflects the ideology of productivist welfare capitalism. Holliday (2000) introduces the term ‘‘productivist welfare capitalism’’ by stressing the observation that social welfare policy is subordinated to and defined by the growth-oriented economic policy in East Asia. The asset-based welfare practice, however, also carries features of developmental welfare capitalism, which sees social welfare as social investment (Midgley and Tang 2001). Doling and Ronald, however, do not attempt to discern the differences between productivism and developmentalism and simultaneously use them as ‘‘two underlying logics’’ (Doling and Ronald 2014: 24).

Agriculture Environment and Living Environment Influence on Farmers\' Housing Research

The sandwich crowd is housing property owners the standard by social class, but also to public policy coverage as a standard division policy target groups; Based on public policy coverage as a standard by policy target groups. The sandwich layer groups is the direct cause of low-income groups purchase ability is ceaseless and abate, prime cause is the housing speculation demand extrusion low-income groups owner-occupied consumption demand and housing security public policy without timely coverage of low income group. The perfect sandwich layer housing security of the population in public policy, the key is to do low-end security, that they

The determinants of household electricity consumption in Taiwan: Evidence from quantile regression

This paper employs quantile regression to analyze the determinants of household electricity consumption in Taiwan over the period 1981–2011. Our results show that the effects of demographic, socioeconomic, and household dwelling characteristics on household electricity consumption may differ across quantiles and may change over time. We found that household income and household size were significant in all quantiles for each year. We identify the characteristics of high-electricity-consuming households. Households with higher income, larger household size, and more elderly members consumed more electricity. In terms of dwelling attributes, larger housing areas, homes with more appliances, and owner-occupied, business-used, and multi-floor houses contributed to higher household electricity consumption. Strategies for reducing electricity consumption should focus on specific groups that tend to exhibit higher electricity use. However, we also found that the low-income and small-size households may have higher electricity consumption on a per capita basis. Thus, as household size decreased, the increase of per capita electricity demand driven by the change of household size should be a matter of concern.

Housing Discrimination Among Available Housing Units in 2012: Do Paired Testing Studies Understate Housing Discrimination?

In 2012, the Department of Housing and Urban Development launched the fourth major nationwide housing discrimination study with the goal of measuring housing discrimination in rental and owner-occupied housing for blacks, Hispanics and Asians. The substantial declines in discrimination observed between 1989 and 2000 lead to a considerable debate about whether paired testing studies of the type conducted in 2000 understate the extent of housing discrimination. Using the 2012 study and earlier evidence, this paper considers three of the significant concerns about paired testing studies of housing discrimination: 1. exclusion of minorities during the process of setting up appointments, 2. the net measure of adverse treatment understating discrimination because some housing units are systematically not shown to white testers, and 3. the use of metropolitan wide advertisements for conducting tests may systematically miss neighborhoods where discrimination is higher. The 2012 study directly addresses the first concern finding at most very low levels of discrimination in obtaining an appointment over the phone. The evidence for the second concern is mixed. The levels of equal treatment in 2012 in terms of basic access were quite high leaving little room for the systematic exclusion of white under some circumstances, while steering persisted against both blacks and Asians in owner-occupied housing. Nonetheless, estimates of steering were modest, and the gross levels of adverse treatment are far too large to be explained by the steering observed in 2012. In order to address the third concern, this paper conducts a new empirical analysis in which we measure the availability of rental and owner-occupied housing in each broad neighborhood represented in the 2012 Housing Discrimination Study, and reweight the tests to represent the spatial availability of housing across each metropolitan site rather than the distribution of advertisements. While the reweighting substantially changed the weights on individual tests, the average attributes of the neighborhoods represented by those tests experienced only modest changes from reweighting, and the estimated measures of adverse treatment were unchanged.

The Income Tax Penalty on Rental vs Owner-Occupied Housing: An Argument for Apartment Rent Tax Exemption

This paper presents a novel analysis of the differential incidence and effect of Federal income tax policy on owner-occupied and rental housing in the U.S. The objective is to examine whether, and how, rental housing is penalized relative to owner-occupied housing, and if so to estimate the magnitude of any such penalty that is caused by Federal income tax policy. The findings of the analysis suggest that a penalty does exist on rental housing relative to owner-occupied housing, and that the magnitude is substantial. On a present value capitalized basis the relative penalty is likely on the order of one-quarter the value of the housing. The model presented in this paper is novel in that it applies the basic tenets of modern corporate finance theory to identify the sources and magnitude of the differential tax impact. The causes of the differential impact that are thusly identified suggest a policy remedy that differs from the one traditionally proposed, which is simply to eliminate the home mortgage interest tax deduction. Instead, the analysis herein suggests that the home mortgage tax deduction is not the source of the differential tax impact (for one thing, interest on mortgages financing rental apartments is also deductible from the landlord’s taxable income, and for another, lenders providing the mortgage capital are generally taxable investors on the margin). Rather, the model presented here implies that the more direct and appropriate policy remedy would be to allow apartment investment income to be deductible from taxable income. This could also be a more politically feasible policy than to remove the mortgage deduction.

Housing Equity Withdrawal in Australia: Prevalence, Patterns and Motivations in Mid-to-late Life

In an era of population ageing, the primary home is increasingly viewed as a personal resource that can perform a pension role in retirement. This article assesses the extent to which Australians aged 45 years and over withdraw housing equity through in situ mortgage equity withdrawal (MEW), downsizing and selling up. We find that the incidence of housing equity withdrawal has increased over the last decade despite a global financial crisis. MEW is the dominant form of equity release among those under pension age, while downsizing or selling up is more frequent among those above pension age. Downsizing and selling up are more likely to be prompted by adverse life events than MEW. Selling up is typically an option of last resort. Our findings offer insights into important debates around homeownership societies and the welfare role performed by owner-occupied housing in mid-to-late life.

The influence of tenure status on housing satisfaction and indoor environmental quality in Finnish apartment buildings

Based on a previous nationwide housing and health questionnaire survey, we observed significant differences in many housing quality attributes by dwelling types and tenure status. Respondents living in apartment buildings and rental houses reported being less satisfied with their housing conditions than respondents living in owner-occupied apartments or houses in Finland. In this subsequent work, we aim to study the associations between tenure status and housing satisfaction among respondents living in apartment buildings (N = 397). Further, we used measurement data collected from 28 apartments in six buildings to determine if the differences in housing satisfaction could be related to objectively measured indoor environmental quality indicators: indoor temperature, relative humidity, and carbon dioxide concentrations. Based on the results, the respondents from rental flats were significantly more unlikely to be satisfied with their dwelling, and to report their dwellings to be suitably warm in winter than the respondents from owner-occupied flats. Based on the measurement data, small differences were observed in thermal conditions by tenure status; however, a large portion of all apartments appeared to be overheated, and only one apartment experienced room temperatures below 18 °C during winter. In conclusion, there were large differences between occupant self-reported satisfaction and thermal comfort by tenure status, but differences in measured parameters were relatively small. The results indicate that occupant characteristics are likely to explain a majority of differences by tenure status, which should be taken into account when assessing the overall relationships between housing and health.

The Illiquidity of Owner-Occupied Housing and Bequest Motives in Japan

The Illiquidity of Owner-Occupied Housing and Bequest Motives in Japan

Homeownership-Based Welfare in Transition

Welfare-state restructuring featuring the use of equity held in owner-occupied housing assets to offset declining public welfare resources and diminishing pension reserves – a form of ‘homeownership-based welfare’ – has become increasingly prominent in many developed economies in recent decades. This paper, focusing on the UK, examines the shifting position of homeownership, arguing that while the private home has become a key component of welfare restructuring, both owner-occupation and housing equity have become more polarised in the last decade, especially across cohorts. A particular concern is whether passive homeownership-based welfare switching strategies have become more active, or even pro-active, strategies to housing property accumulation as a means to compensate for welfare state retrenchment and anticipated pension shortfalls leading up to and since the Global Financial Crisis. We identify the significance of the rapid advance of a ‘generation landlord’ in the recent development of ‘generation rent’.

Housing Policies for Asia: A Theoretical Analysis by Use of a Demand and Supply Model

The main objective of this paper is to give an overview of the most commonly used housing policies and to illustrate their economic impact. To facilitate the analysis, we first introduce a simple two-period housing demand model for owner-occupied houses and rental houses. We then add a standard stock-flow housing supply model. Using this modelling framework, we explain the qualitative effects of various housing policies on supply and demand. In the last section of the paper, we provide a quantitative estimation of the impact of each policy and assess its effectiveness using a simple analysis of cost effectiveness. We hope that the model’s versatility makes it a simple tool for policymakers to better understand the economic consequences of various housing policies.

Financialising public housing as an asset for retirement in Singapore

In Singapore, more than 85% of the one million households living in public housing own a 99-year lease on their flat. This high rate of ‘ownership’ has been enabled by allowing leaseholders to make pre-retirement withdrawals from their social security savings accounts for monthly mortgage payments, with the expectation that the flat will eventually be monetised to fund the lease-owner's retirement. In order to meet future retirement needs, the market value of public flats, therefore, must necessarily increase, preferably exceeding annual inflation, in order to preserve the capital invested. This paper examines a number of consequences and contradictions resulting from a system built upon an inflationary regime in which economic security in later life depends on sustained house price inflation. Having encouraged the entire nation to invest their retirement savings in owner-occupied public housing, the public housing authority and government together now bear responsibilities for ensuring both steady increases in property values and establishing regulations for monetising them. Lease-owners are in turn pressured to find ways to enhance their capital investments in their flats by working around the rules and regulations of ownership. Over time, however, persistent house price inflation has begun to create affordability problems for new entrants to the public housing market. Subsequently, the positive contribution of the universal public housing programme to the political legitimacy of the incumbent government is being transformed into a ‘burden’. Maintaining balance among the simultaneous and systemic contradictions with the public housing programme has thus become a constant preoccupation of the housing authority and the government.

Ageing at home? Meeting housing, health and social needs

Purpose – The purpose of this paper is to consolidate the range of issues relevant to owner occupiers who age in place and to offer an initial overview of how effective partnerships can respond to and meet the changing needs of housing, health and social care of our ageing population. Design/methodology/approach – Issues affecting older people's changing needs are considered holistically and considered in terms of how partnerships can be enhanced to develop improved services in the future. Findings – Most owners wish to stay in their own homes for as long as possible and it can be cost-effective to do so; however, we need to look at new and innovative ways of developing and providing front-line services to enhance health and safety in the home, but also quality of life and wellbeing such as combating loneliness and isolation. However, although there are examples of evidence-based good practice, service provision is variable and there is a risk that many older home owners may miss out on services for which they may are eligible. With this in mind, it may be helpful to develop a new framework where one key practitioner holds responsibility to consolidate and coordinate the range of local services available as a package that offers a range of housing, health and social care services. Originality/value – There are currently many policy and practice gaps in older owner occupier's housing conditions and suitability to meet their changing needs. This paper has a particular starting point in housing, and how other personal or technological services can help support independence for as long as possible and adapt to the owner-occupier's changing health and social care needs as they age in place. The authors emphasise the importance of sharing evidence-based good practice partnerships.