Single Housing Market Research Articles

Staged implementation of inclusionary zoning as a mechanism to improve housing affordability in Auckland, New Zealand

Purpose The purpose of this paper is to analyse how the staged implementation of inclusionary zoning (IZ) performs relative to conventional IZ programmes in terms of increasing the number of low- and moderate-income households become homeowners. Design/methodology/approach The paper applies a matching model implemented through a mixed-integer programme model taking Auckland (New Zealand) housing market as a case study. The IZ is simulated by two features: a target price (below which affordable houses are defined) and the income threshold (below which any household gains access to the programme). The staging of IZ consists of first directing affordable houses to low-income households, where those houses that are not sold are cascaded to subsequent population groups with higher incomes. Findings The staged implementation of IZ does not necessarily imply that the number of sales will increase both for affordable and market-rate houses. However, a hybrid approach defined by two target prices results in a greater number of sales relative to a conventional IZ and a baseline affordable market while achieving market efficiency and equity. Research limitations/implications The paper is limited to the marginal impact of new affordable houses entering the market. It does not address further market rounds for houses left empty for tractability purposes. Also, the analysis is circumscribed to current renters and not owners, if owners were included they would outbid renters and distort the intended impact of IZ as an affordable housing policy. Originality/value The paper has relevance for policymakers because it provides evidence about the dimensions of IZ to have a lasting effect on housing affordability. The model is applied to a single housing market but is suitable to be generalized and adapted to a different urban environment.

Two countries, sixteen cities, five thousand kilometres: How many housing markets?

AbstractWe examine whether a single (dynamic) housing market exists across 16 cities within Australia and New Zealand. The two countries are closely integrated but cities are up to 5,000 kilometres apart. A single housing market exhibits a common set of forces determining the long run real house price path in all cities. A strong (weak) form occurs when an innovation affects house prices across all cities to an equal (unequal) degree. The 16 cities comprise a weak form single housing market with significant spatial and dynamic complexities. Three city groups emerge with a natural interpretation in terms of economic and spatial characteristics.

Two Countries, Sixteen Cities, Five Thousand Kilometres: How Many Housing Markets?

We test whether a single housing market exists across sixteen cities covering two countries, Australia and New Zealand. Distances between these cities are vastly greater than commuting distances. We define a single housing market as one in which a single stochastic trend describes the long run path of real house prices in all cities. A strong form single housing market occurs when an innovation to the stochastic trend affects house prices across all cities multiplicatively to an equal degree. A weak form occurs when an innovation to the stochastic trend affects house prices in all cities, but not to an equal degree. We find that the sixteen housing markets are characterised by a weak form single housing market. The dynamic structure of adjustment reveals three groups of cities. House price shocks are first reflected in the price dynamics of a leading group of Australian cities (including Melbourne and Sydney), then flow to a group of follower cities comprising peripheral Australian and major New Zealand cities, and then to a group of laggard cities within New Zealand. Our theoretical model demonstrates how a weak form single housing market may arise due to differences between cities in house price responses to land prices, migration responses to house prices and/or land price responses to migration flows.

Determinants of local housing growth in a multi-jurisdictional region, along with a test for nonmarket zoning

In the State of New Jersey, two rural preservation tools are paramount: (1) Zoning that sets a floor on the size of residential lots; and (2) the outright acquisition of open space or its development rights by government and nonprofit entities. The present study explores the effects of these two policies on the number of building permits issued across 83 municipalities in northern New Jersey. The empirical work is based on a widely-used urban development model that uses both monocentric and polycentric factors to allocate growth across a set of suburban communities. The study also develops a growth-based test for binding minimum-lot-size zoning, leveraging the fact that the 83 communities are in a single housing market and must serve the distribution of home and lot-size demand collectively, not individually. The study finds strong evidence of excess large-lot zoning, leading to the suppression of short-term housing growth in communities that specialize in this particular “product.” No firm evidence is found that residential development is attracted to the amenities that flow from either large-lot zoning or open space set asides.

Domino Effects Within a Housing Market: The Transmission of House Price Changes Across Quality Tiers

We argue that shocks to a housing market are transmitted through the hierarchy of quality tiers within a housing market. The result is the prediction of waves of house price changes accompanied by changes in transaction volume. Our study is related to existing models of spatial ripple effects across housing markets. The data are from the Hong Kong housing market. The findings from Granger causality tests strongly support the argument that domino effects within a single housing market occur in response to external shocks.

The Effects of Portland's Urban Growth Boundary on Housing Prices

Unlike previous studies, which used metropolitan level data, this study uses spatially disaggregated data (block group data from the U.S. Census) to statistically test the effects of Portland's urban growth boundary (UGB) on housing prices. This analysis shows no evidence of a significant difference between housing prices inside and outside the UGB, suggesting that both inside and outside the UGB are parts of a single housing market.

Income and Urban Home Ownership

IN contrast to the extensive empirical work on the income elasticity on demand for housing services, the relation between tenure choice and income has received relatively little attention. Those studies which have been completed have generally involved only a single housing market, and the method, data used, and the markets studied have been so diverse as to make comparison of the resultant estimates extremely difficult. Further, one of the major shortcomings of earlier efforts has been the lack of a proper theoretical framework underlying the estimated models.' The purpose of the present paper is to develop and test a model of aggregate tenure choice based on the household tenure decision. The tenure-choice estimates are based on a sample of metropolitan areas and are obtained for six household types by race using income data for eight income intervals. The principal value of the research is the rigorous definition of the aggregate tenure-income relation and the provision of estimates that can serve as benchmarks with which to compare similar estimates for individual housing markets.' The estimates might also serve as an input into the evaluation of public policies involving home ownership, such as the effect on home ownership rates of changes in the treatment of certain ownership related expenses under the Internal Revenue Code. The main findings are the estimates of the income elasticity of demand for owner occupancy. The elasticity at the mean for all households combined is about 0.18. Wide variation among household types was found: elasticities larger than the mean were obtained for husband-wife family types with heads under age 45 and for non husband-wife families and primary individuals. There are substantial differences between races in the elasticities, although the overall pattern for household types just described remains generally valid for both races. The mean income elasticity of all black households combined is somewhat larger than for all white households, 0.25 vs. 0.18. The remainder of the paper consists of two sections. In section II the theoretical model is developed and its empirical specification given. Section III presents the estimates of the aggregate cross-cities model and contrasts them with fairly comparable estimates for a single housing market.