Urban Economics 4 Housing, Housing Markets and Housing Policy

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Urban Economics (4)Housing, Housing Markets and
Housing Policy

• Dr. Sieglinde Amelia Walter
• Ingolstadt 2008

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Contents
Housing

• Agents of the city
• Characteristics of housing
• Housing market
• Housing policy
• Segregation

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The Agents of the City
Housing

• business firms
• households
• government

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Characteristics of Housing
Housing

• the housing stock is heterogeneous
• housing is immobile
• housing is durable
• housing is expensive
• moving costs are relatively high

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The Price of Housing
Housing

• size (number of rooms, number of badrooms)
• roof price
• dwelling quality (interior, central heating, age)
• locational price (exterior quality of adjacent
  dwellings, exterior quality of dwellings on
  block, miles from CBD)
• neighbourhood effects

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The Housing Market - Characteristics
Housing

• segmented in submarkets with respect to size,
  location, and quality
• but related submarkets

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The Durability of Housing
Housing

• Deterioration and Maintenance
• Retirement decision
• - conversion
• - boarding up
• - abandonment

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Durability and Supply Elasticity
Housing

• Three types of supply response to an increase in
  price
• build new dwellings
• lower deterioration of used dwellings
• remodel used dwellings

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Housing Market - Models
Housing

• The filtering model
• The sicker process
• The arbitrage model

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The Filtering Model (Ratcliff and Lowry 1960)
Housing

• compared with the standard of new dwellings the
  quality of a given dwelling falls in time
• previous occupants or occupants with high income
  move to new dwellings
• the price of the dwelling decrease
• the decrease in price make the dwelling
  accessible to occupants with lower income with
  the change of the dwelling from one quality level
  to the lower one also changes the group of users
• this process goes on until the dwelling is
  unrentable to be rented
• each quality level of a dwelling is a considered
  a submarket
• filtering up process and filtering down process

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The Sicker Process (Weissbarth and Thomae 1978)
Housing

• Chains of moving caused by new dwellings
• Focus user of one dwelling

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The Arbitrage Model (Bailey 1959)
Housing

• The importance of neighbourhood and other
  locational factors for the value of a dwelling
• Focus the neighbourhood of one dwelling

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The High Costs of Housing
Housing

• capital costs
• deprecation
• maintenance costs
• taxes for ownership

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Housing Market in Germany
Housing
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Housing Policies
Housing

• housing assistance
• -        - operating on the supply side
• -        - operating on the demand side
• community-development programs
• -        - minimalize declining areas of the city
• -        - improve the housing of poor households
• maximum price for rental housing

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Conditions of Housing Stock
Housing

• adequate
• inadequate
• crowded
• cost burdened

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Assistance Programs Operating on the Supply Side
Housing

• capital subsidies
• operating subsidies
• modernisation subsidies
• tenant selection

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Assistance Programs Operating on the Demand Side
Housing

• rent certificates
• housing vouchers

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Segregation
Housing

• External effects on urban property values
• the clustering model
• the boundary effects

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Segregation by Race Ghettos
Housing

• The residential segregation of black people in
  USA
• alternative explanations
• -      landlords and real estate agents?
• -      sellers?
• -      landlords, real estate agents, mortgage
  lenders,
• and local governmental officials?
• -      government?
• the clustering model

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Urban Economics

• sieglinde.walter_at_ku-eichstaett.de