Owner Occupation Research Articles

Right to Buy? Time to Move? Investigating the Effect of the Right to Buy on Moving Behaviour in the UK

One of the goals of the Right to Buy (RTB) was to stimulate labour migration by removing the debilitating effect of social housing on geographical mobility. This is the first study to examine rigorously whether the Right to Buy legislation did indeed 'free-up' those in social housing who bought their homes. Using longitudinal data from the British Household Panel Survey (BHPS) and panel regression models we show that the probability of a RTB-owner making a long distance move falls between that of social renters and owner occupiers. However, the difference between RTB-owners and neither homeowners nor social renters is significant. Social renters are significantly less likely to move over long distances than traditional owners. The results also suggest that RTB-owners are less likely than traditional owners to move for job related reasons, but more likely than social renters.

Neighbourhood Effects, Housing Tenure, and Individual Employment Outcomes

This paper investigates whether individuals living in neighbourhoods with high concentrations of unemployment are less likely to enter work if they are unemployed and more likely to lose their job if they are employed. The main challenge in the neighbourhood effects literature is the identification of causal neighbourhood effects. A particular problem is that individuals do not randomly select neighbourhoods to live in: the selection process is often linked to the labour market situation and potential of individuals. To get more insight in neighbourhood effects we run separate models for social renters and owner occupiers. This study uses anonymised individual level longitudinal data from the Scottish Longitudinal Study for 1991 and 2001 with multiple neighbourhood scales operationalised. Based on the results we argue that any apparent neighbourhoods effects that were present in models of the full population are at least partly an artefact of different neighbourhood selection mechanisms. The conclusions of the paper call for a more nuanced treatment of neighbourhood effects and the development of models that seek to include neighbourhood selection from the outset.

SINGLE MOTHER HOUSEHOLDS' HOUSING CONDITION IN TOTTORI PREFECTURE, OSAKA PREFECTURE AND OSAKA CITY

This study aims to understand single mother households' housing situation including housing tenure, minimum housing standard and housing expense to income ratio in Tottori prefecture, Osaka prefecture and Osaka city. In conclusion the housing condition in Tottori prefecture (rural area) is better than Osaka prefecture or Osaka city (urban area) however compare to general households single mothers'owner occupation rate is lower and the living space is smaller,. Moreover the housing condition gap between single mothers and general households is much larger than urban area.

House value as an indicator of cumulative wealth is strongly related to morbidity and mortality risk in older people: a census-based cross-sectional and longitudinal study

There has been relatively little research into health inequalities in older populations. This may be partly explained by the difficulty in identifying appropriate indicators of socio-economic status for older people. Ideally, indicators of socio-economic status to be used in studies of health inequalities in older populations should incorporate some measure of life-time socio-economic standing, and house value may fill this role. This study examined whether an indicator of accumulated wealth based on a combination of housing tenure and house value was a strong predictor of ill-health in older populations. A total of 191 848 people aged > or =65 years and not living in communal establishments were identified from the 2001 Northern Ireland Census and followed for 5 years. Self-reported health and mortality risk by housing tenure/house value groupings were examined while controlling for a range of other demographic and socio-economic characteristics. Housing tenure/house value was highly correlated with other indicators of socio-economic status. Public-sector renters had worse self-reported health and higher mortality rates than owner occupiers but significant gradients were also found between those living in the highest- and lowest-valued owner-occupier properties. The relationship between housing tenure and value was unchanged by adjustment for indicators of social support and quality of the physical environment. Adjustment for limiting long-term illness and self-reported health at baseline narrowed but did not eliminate the health gains associated with living in more expensive housing. House value of residence is an accessible and powerful indicator of accumulated wealth that is highly correlated with current health status and predictive of future mortality risk in older populations.

Should We Ban or Welcome 'Spec' Home Buyers?

This paper begins by recounting the extent to which speculating buyers contributed more than proportionately to housing price volatility and the rate of mortgage foreclosure. The second section turns to the way spec buyers deceived mortgage lenders by committing occupancy fraud, claiming falsely that they were buying as owner occupants so they could benefit from more favorable mortgage rates and terms. The third section starts by describing the mischief spec buyers caused home builders and condo developers by signaling phantom housing demand, and degrading ‘for sale’ housing tracts and condo developments by leaving newly bought homes vacant or filling them with short term rentals. The fourth section explores the rationale for a government imposed ban on home flipping. This would be a publicly imposed constraint on alienability.

The impact of changing demographics and pensions on the demand for housing and financial assets

AbstractThe main aim of this paper is to analyse the impact of shifting demographics and changes in pension arrangements in a model that includes housing as both an investment asset and a consumption good. We consider the impact on welfare, and on macroeconomic aggregates, of some specific pension reforms. Using a calibrated OLG model with several sources of uncertainty, we find that the impact of ageing and of reform of social security upon the demand for housing and the level of owner occupation is substantial. We find that pension reform has a very significant impact on the demand for, and price of, housing. The interaction between pension reform and housing is a neglected subject and one which the results we present suggest is important.

Questions about the equivalence of market rents and user costs for owner occupied housing

For modern nations, it is recognized as important that temporal and spatial variations in costs for comparable dwelling services are carefully measured. The costs of owner occupied as well as rental housing have important roles to play in both the consumer price index (CPI) and the System of National Accounts (SNA). The 1993 System of National Accounts (SNA93) specifies that a rental value of the housing stock should be included as part of the aggregates for personal consumption, personal income, income of proprietors and value added for the real estate industry. Yet, little attention has been devoted to an underlying commonality of practice: the implicit assumption that housing cost information for either renters or owner occupiers can be used for assessing movements over time and spatial differences in the cost of housing for both renters and owners, after allowing for differences regarding payment for taxes and certain ongoing expenses such as insurance and utilities. But in the real world, are the services that renters and owner occupiers get from their dwellings comparable? Also, for both renters and owner occupiers, are there place-related differences in the services they derive from their dwellings? And if so, what are the implications for official statistics making? These are the questions raised by the empirical results presented in this paper.

The owner occupier democracy and violation of building by-laws

This research is based on a case study of Buru Buru estate, the biggest middle class residential estate in Nairobi, Kenya. Casual observations in Buru Buru estate show that there has been indiscriminate design and construction of house extensions with no reference to building by-laws and zoning ordinances. The study has three main objectives namely; to establish the violated building By-laws during construction of the extensions, to establish the owner occupier reasons for these violations and to examine the role of culture and building experts in changing the By-laws. The By-law issues investigated include; the size of the spaces, the building setbacks and heights; lighting, ventilation, internal courts, the plot coverages and the plot ratios. The study set out to establish the extent of the violation of these building by-laws by carrying out a survey and observations of the sampled 89 Buru Buru plots which had extension constructions. The study relied on the descriptive and spatial analysis of the data collected from the sample. The study revealed that building regulations were in conflict with needs and circumstance of the residents of Buru Buru estate. This has led them to violate the By-laws. The study has also established that the most violated building regulations are those relating to setbacks, area of inner courts, area and dimensions of spaces, plot coverage, plot ratio and building height. There is need to re-look at these By-laws through discussions among the building experts, local residents and the Nairobi City Council. This study has recommended that in the process of rewriting the regulations it will be important to incorporate the concerns of local residents and the whole process should be democratic. Finally, the new legislation should take into consideration the traditional culture and the present socio-economic demands of the people and their aesthetic orientations in buildings.

Accounting for Housing in a CPI

Statistical agencies in different nations usually use the rental equivalence approach to the treatment of housing in their CPIs but a few countries use the user cost approach. The paper argues that an opportunity cost approach is the correct theoretical framework for accounting for OOH in a CPI. This approach, first mentioned in a 2006 OECD paper by Diewert, is developed more fully here. We explore the relationship of this new approach to the usual rental equivalency and user cost approaches. The new approach leads to an Owner Occupied Housing Opportunity Cost (OOHOC) index that is a weighted average of the rental and the financial opportunity costs.

MONETARY TRANSMISSION MECHANISM IN CENTRAL AND EASTERN EUROPE: SURVEYING THE SURVEYABLE

Abstract This paper surveys recent advances in empirical studies of the monetary transmission mechanism, with special attention to Central and Eastern Europe (CEE). Our results indicate that the strength of the exchange rate pass‐through substantially declined over time mainly due to a fall in inflation rates and to some extent due to the so‐called composition effect. The asset price channel is weak and is likely to remain weak because of shallow stock and private bond markets and because of low stock and bond holdings of domestic households. House prices may become an exception with booming mortgage lending and with high owner occupancy ratios. While the credit channel could be a powerful channel of monetary transmission – as new funds raised on capital markets are close to zero in CEE – it is actually not, as both commercial banks and non‐financial corporations can escape domestic monetary conditions by borrowing from their foreign mother companies. The moderately good news, however, is that those banks and firms are influenced by monetary policy in the euro area because their parent institutions are themselves subjected to the credit channel in the euro area.

Housing Wealth and Household Portfolios in an Ageing Society

Housing is one of the most important consumption goods, also for the elderly. For owner–occupiers, housing equity is moreover usually the most important asset in their investment portfolio, and hence, household wealth of the elderly is extremely sensitive to developments on the housing market. This panel paper surveys the literature on housing as a consumption good and asset category over the life cycle and moreover presents stylised facts on the housing market behavior of Dutch households over their life cycle. Although many of the issues discussed also occur in other countries, the Dutch housing market is used as a background o the review.

Financial Soundness Indicators for Owner Occupiers

Real house prices in Denmark turned downwards in 2007 after a sustained period of growth. The associated increases in borrowing left Danish owner occupiers as the most highly indebted in the OECD countries. With the downturn, signs of financial fragility in the housing market and in financial institutions are emerging. An analysis of the financial soundness of owner occupation and the impact on financial stability is topical. This paper employs a unique set of individual tax statistics data at the family level to estimate and follow certain ratios over the recent housing market cycle. The ratios for the 30–39-year-old owner occupiers, who may have bought recently and therefore are the most indebted, are examined. Both their housing wealth/income ratios and their net liability/income ratios had increased to ‘all-time high’ levels in 2005, while their influence remained at the same high level over the whole cycle. The ratios presented can be utilised as a set of financial soundness indicators both for categories of households and for the housing market to predict financial unsoundness, and to provide an early warning in the context of changes in the economic environment.

On the Path to Homeownership: Money, Family Composition and Low-income Households

In Norway, as in many other countries, homeownership is encouraged politically, and a majority of the households become homeowners at some stage in their life cycle. Many households move house when circumstances change, and it is often at this point that they also make their tenure choice. This paper employs a bivariate probit framework to model the transition rate from renting into homeownership. Using a sample of initial renters, subsequent tenure choice is analysed jointly with the stay-move decision. A particularly important question in this context is whether low-income households face differential constraints on entering owner occupation that could be addressed by policy change. The empirical model includes financial characteristics, household characteristics and changes in household characteristics as explanatory variables. Changes in household composition are particularly important in explaining variations in both tenure choice and mobility. Hence, the common practice of estimating housing market behaviour using a panel of intact households potentially obfuscates important determinants of that behaviour. The paper proceeds by using the equivalent of a Chow test to show that a hypothesis of equal coefficients in samples of low- and high-income households is firmly rejected. Thus low-income households do behave differently. Short-term variations in income appear to have little effect on people's capacity to enter owner occupation. However, low-income households are more dependent on past savings for successful entry. This suggests a rather different policy approach if owner occupation is to be expanded.

Non-Cash Benefits and the Distribution of Economic Welfare

Non-cash benefits can have substantial effects on the distribution of economic welfare. Standard approaches to the inclusion of non-cash benefits in broader measures of resources have failed to take adequate account of the pattern of needs associated with the greater use of health and education services. Our results, for Ireland in the year 2000, show that it is possible to derive more appropriate measures of total resources than have been derived using standard methods. The results indicate that the greatest impact comes from the inclusion of imputed rent for owner occupation as part of the measure. When this is done, the rate of resource poverty for older people is substantially reduced, in line with results which use indicators of standard of living as well as cash incomes (consistent poverty).

The Increased Role of the Private Rented Sector in Catering for Low-income Groups in Northern Ireland

Although the private rented sector (PRS) in Northern Ireland is relatively small when compared with the other tenures, it performs a number of important functions in addressing housing needs. The PRS is not homogeneous and is made up of a number of sub-markets. Rugg, Rhodes and Jones (2002) have summarised a number of demand groups for private renting, including life-stage young people renting a property before entering owner occupation, short-term emergency such as households experiencing relationship breakdown, older renters that have been living in privately rented housing for some time and residual users, namely housheolds in low incomes. This paper examines data from the Northern Ireland House Condition Survey, the Continuous Household Survey and interviews with tenants and estate/letting agents. The paper presents evidence indicating that those living in the PRS are increasinly residual users, i.e. those that have traditionally been housed in the social sector and outlines the reasons for the phenomenon. The paper is based on research commissioned by the Northern Ireland Housing Executive that was carried out in twp phases.

The Impact of Multi-Level Governance on Energy Performance in the Current Dutch Housing Stock

The housing sector is responsible for 33% of total CO2emissions in the Netherlands. As such, large reductions in CO2emissions can be gained by increasing the energy performance in the existing housing stock. Yet, several barriers make this difficult. Renovation investments and maintenance costs are high while badly needed norms for energy improvement are absent. Furthermore, market developments and sectoral policies reflect a complex institutional environment in which many actors are interdependent, but also lack an individual sense of urgency regarding energy consumption. In this article, we try to determine how multi-level governance in Dutch housing affects the outcomes of policies aimed at CO2-reduction in the existing housing stock. We examined two housing sectors in the Netherlands: social housing and owner occupancy. We focus on policy implementation problems in the early 2000s. It turns out that the complex multilevel environment severely impedes the realization of ambitious policy goals.

An Intertemporal Capital Asset Pricing Model With Owner Occupied Housing

This paper studies the portfolio choice and asset pricing in the presence of owner-occupied housing in a continuous time framework. Owner-occupied housing serves as an important consumption good as well as a dominant asset for most households. The theory part of this paper shows that the market portfolio is not mean-variance efficient; and traditional CAPM fails in a model with owner-occupied housing; however, a conditional linear factor pricing model can still be derived, in which the market portfolio return and housing return are two pricing factors. Moreover, the nondurable consumption to housing ratio, ch, is shown to affect expected returns in the same way as cay (the consumption-to-wealth ratio in Lettau and Ludvigson 2001a, 2001b) The empirical evidence shows that ch can predict asset returns at various horizon ranging from one quarter to two years. ch is also shown to enter linearly the stochastic discount factor of the economy. The cross-sectional Fama-MacBeth regressions show that the conditional models conditioning on ch perform much better than their unconditional counterparts, and the conditional two factor model derived in this paper performs almost as good as Fama-French three-factor model.

Eviction: Owner Occupancy (A Requiem)

Eviction: Owner Occupancy (A Requiem)

Slum Real Estate: The Low-Quality High-Price Puzzle in Nairobi’s Slum Rental Market and its Implications for Theory and Practice

Summary This study of 1755 households in Nairobi’s slums challenges the conventional belief that slums offer low-quality low-cost shelter to a population that cannot afford better standards. In Nairobi, slums provide low-quality but high-cost shelter. Although slum residents pay millions of dollars in rents annually, and better quality units command higher rents, very little is being re-invested to upgrade quality. To resolve the challenge that the Nairobi puzzle poses for theory and practice, we develop a new analytical framework for understanding quality of living conditions. Improving conditions in Nairobi’s slums requires, we argue, two simultaneous interventions: alteration of the tenure mix to enhance owner occupancy and infrastructure investment.

Editor's Introduction

Editor's Introduction