GGR%20357%20H1F%20Geography%20of%20Housing%20and%20Housing%20Policy

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GGR 357 H1F Geography of Housing and Housing
Policy 
Session 7 Access to housing Housing
allocation June 9, 2008
DR. AMANDA HELDERMAN
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Announcements

• Web page http//individual.utoronto.ca/helderman
  
• Midterm answers and last weeks lecture slides
  are available
• Midterm preliminary results available

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Announcements

• Available for you to pick up at the office in Sid
  Smith
• This years results
• Lowest 22 highest 88 average 52 mode 39
  median 49
• Last years results
• Lowest 52.5 highest 91 average 68.8 mode 64
  median 67.5
• No make up test
• Requests to redistribute the weights of the exams
  and assignment based on official documents only
  (such as a UofT doctors note)

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Announcements

• Class representative APUS
• http//www.apus.utoronto.ca/
• Summer students taking 1.0 credit or less (one
  course for one term only ? representative for the
  whole summer, until August.
• Tuition freeze, university/gvt financial aid for
  part-time students, on-campus housing for
  part-time students, family care, and summer/
  evening course selection
• Representatives receive periodic information and
  keep their class mates informed
• Feedback to APUS you might receive from class
  mates
• NOMINATIONS?
• QUESTIONNAIRES

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Housing allocation, introduction

• The distribution of housing among social groups/
  households in a given location
• Housing allocation mechanisms are parts of
  housing systems
• They divide housing across the population
• Interesting process, because both market and
  government have responsibilities
• They have differently prioritized, but some
  common, goals!
• Different mechanisms that steer the process

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Housing allocation

• Two principle domains housing allocation through
  the private market and through the public sector
• Most countries have a mixture of these two
  mechanisms
• Even within countries, actual systems of
  allocation differ widely
• Many systems, different scales, different stocks,
  different dynamics, different demands

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The private market

• Mechanism competition or price
• Price is determined by the values that people
  attach to housing and their ability to pay
• The functioning of the market is based on the
  financial resources of firms and their
  willingness to produce housing for profit
• Main objectives are efficiency, maximizing output
  and minimizing excess prices and rents

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The public sector

• Governments, housing officials and community
  groups are the main providers and allocators in
  this sector
• Mechanism competition and cooperation
• The mechanism is based on individual and
  collective needs (social priorities)
• The functioning of the mechanism depends on the
  objectives of the agency involved
• Main objectives are a greater equity or social
  welfare, and assuring adequate housing for all

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Goals of efficiency and equity

• Both consider efficiency and equity important
• The public and the private sector handle their
  and each others main goals with different
  criteria (costs, prices, stock attributes)

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Efficiency

• Private market minimizing aggregate housing
  prices and rents, maximizing output and profits,
  and maintaining rates of return
• Public sector maximizing the use of the housing
  stock, minimizing administrative costs,
  maintaining adequate stock

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Equity

• Private market allocation
• no one can move without making others worse off
• price restricts over-consumption
• Public sector allocation
• assuring adequate housing for all
• treating all equally according to their needs

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Type of allocation system

• Mix between private and public
• Ranging from laissez-faire to centrally planned
  society

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Collusion

• Oxfords dictionary a secret agreement for a
  fraudulent purpose
• In this context Acting together to exclude
  others
• A private factor that both the private market and
  the public sector have to deal with
• In private market exclude from the neighbourhood
  for example
• In public sector more subtle altering of the
  location of public housing or altering waiting
  lists

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Functioning of the allocation system

• How are criteria established?
• Are the criteria explicit?
• Implicit ? discrimination

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Monitoring mechanisms

• What mechanisms are used to monitor changes in
  preferences, needs, and supply?
• Goal of both private and public parties match
  between households and the housing stock
• What information is needed? How is the
  information collected?
• By whom is the information collected?
• Signals ? Measures

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Implementation of changes

• The information available may indicate changes
• Such changes demand implementation of measures to
  keep matching households and housing
• Carrot Stick subsidies persuasion or higher
  rents

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Housing markets

• Economic market set within a political framework
• Set of institutions and procedures, bringing
  together housing supply and demand for purposes
  of exchanging housing services
• Actors sellers, buyers, renters, landlords,
  builders, consumers
• No single geographic place
• Buyers move to goods instead of vice versa

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Types of housing markets

• Scale
• Macro housing sector of the national economy is
  studied by the relationship between rate of
  investment in supply and aggregate expenditures
  of households
• Micro behaviour of individuals is studied by the
  spatial expression of matching supply and demand
• Location of control (private or public)
• Tenure type
• Age of housing and position in the market
  (sectoral/ submarkets)

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The urban housing market

• A continuous geographic area, more or less
  clearly bounded, within which a household may
  trade or substitute one dwelling for another
  without altering place of work or pattern of
  social contacts
• The spatial extent of the substitution of housing
• No discrete spatial boundaries
• The housing market perceived by developers, not
  households, is larger and may constitute of
  various metropolitan areas

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The market mechanism

• Dominant mechanism in North-America
• The market has a supply (housing units and their
  attributes) and a demand (households and their
  attributes)
• Asking prices versus bid prices

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Micro-economic approach

• Allocation starts as to achieve market clearing
  solution (everything is matched)
• Efficiency minimizes over- and under-consumption
• Total rents and prices are at a minimum
• Optimal no household could be assigned better
  without making others becoming worse off
• Disadvantage Static!
• This model does not allow for change or diversity
  in behaviour

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behavioural elements

• There are different perceptions of the market
  that reflect in varying asking prices and bid
  prices
• The process describes a convergence of asking and
  bid prices until a sale price is reached
• This may take hours, days, weeks, months, years!
• The market circumstances influence the sale price
• A dynamic or tight market (few vacancies and high
  and rising prices) may lead to bid prices that
  exceed the asking prices
• Conversely, in a slow market there may not be a
  convergence and property may even be withdrawn

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Cost of realizing housing

• Input of land and input of non-land
• If the input of land is relatively high lower
  density, single family homes will be more likely
  realized
• If the input of land is relatively low higher
  density housing, multi-family homes

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Cost of land versus other expenses
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Segmented markets

• Quasi-independent subdivisions of an urban
  housing market
• A-spatial and spatial submarkets
• Homogenous clusters of housing types, and/or
  household characteristics
• Unique set of prices/ rents with little
  substitution of one unit for another
• Because of size/heterogeneity, diversity of
  demand, barriers and disequilibria in the market
• Consequences price premium/ discount that
  reflect geographic differences

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Segment criteria

1. Submarkets by tenure classes, structure types
   and values
2. Households income, family type, race or ethnic
   origin
3. Locations by status inner city, inner suburban
   and outer suburban

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Decision-making micro level

• Complex process
• What type of housing, where, what can the
  household afford
• Not the nominal price is the most important on
  the market, but monthly out-of-pocket expenses!
• Housing is demolished or added to the stock
• Households form, dissolve or decease

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Constraints on the housing market

• Constraints may be the result of
• Supply restrictions availability type of housing
• Accessibility restrictions benefit from unique
  location
• Neighbourhood restrictions small areas that are
  especially (un)attractive, premium or discount
  price
• Institutional restrictions redlining, building
  codes, zoning, planning regulations
• Racial, ethnic and class discrimination limits
  search
• Information restrictions differential access to
  information on the housing market

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Result of constraints on housing market

• Prices paid may be more than expected for similar
  housing in a different area
• Movements between areas are less than may have
  been predicted

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Allocation and class

• Housing allocation is always founded by class
  conflicts, according to Weber and others
• The class struggle in capitalist societies
  reflects the social structure of the city
• This struggle is caused by differential means to
  access the housing market, by wide differences in
  income
• Castells (1975) access to housing not only
  depends on income, but also on access to credit
  and thus the predictability of future income
• The ability to use the system may be culturally
  determined

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The institutional context

• Spectrum of administrators, politicians,
  technicians in the housing field gate keepers
  who effectively determine who gets what from the
  housing market and where (Pahl, 1976)
• Critical role of mortgage lending institutions
• Government policy rent control, growth
  development of housing stocks, and fiscal measures

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CMHC

• Canada Mortgage and Housing Corporation (CMHC),
  active since 1946
• Canadas national housing association
• Mostly concentrated on the owner-occupied segment
  of the market
• Provider of mortgage loan insurance,
  mortgage-backed securities, housing policy and
  programs, and housing research
• Until 1966, CMHC set the interest rates! (Now it
  is market determined)
• Public mortgage insurance was the corner stone of
  post war housing policy and remains important
  today

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CMHC

• CMHC works to enhance Canada's housingfinance
  options, assist Canadians who cannot afford
  housing in the private market, improve building
  standards and housing construction, and provide
  policymakers with the information and analysis
  they need to sustain a vibrant housing market in
  Canada.
• Informative website, good source of information
  http//www.cmhc-schl.gc.ca.

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The public allocation system in Canada

• Welfare pluralism centralized welfare system has
  been superseded a decentralized system
• Proliferation of agents much variation in the
  allocation of public housing, social housing and
  assisted market housing
• Top down ? bottom up
• Policy drift local outcomes may be a far cry
  from program intentions
• Mutual shaping takes place
• Third sector housing provision

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Recent history of housing allocation programs

• Requests for public housing came from
  municipalities
• Federal and provincial governments were in
  control of every stage of implementation
• 1970s and 1980s were characterized by increasing
  decentralization and a shift from public housing
  to nonprofits
• Shift was based on concern that low-income
  residents were getting concentrated and
  stigmatized

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Recent history of housing allocation programs

• Yearly unit allocations (6000-30,000 for ON)
  under non-profit programs in the second half of
  the 1980s and 1990s.
• Usually, the units were allocated to third sector
• The programs often were targeted to certain
  people (disabled), certain types of household
  (singles), or geographic areas
• Ministries would give the project sponsors and
  others clear instructions as to the application
  process and the target groups

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Housing allocation programs

• Federal and provincial negotiations produced a
  fair share allocation model (16 target areas)
  based on waiting lists, turnover units and the
  concept of core need (suitable housing not
  available within 30 income range)
• Market rent units were allocated based on
  negotiations with sponsor groups
• The 1990s were characterized by required skills
  developed within the Ministry of Housing (ON)
• Good quality proposals from third parties

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Welfare pluralism

• Local third sector carrying out programs designed
  at a higher level welfare pluralism
• Significant delivery mode
• Allocation is getting closer to targets
  throughout the year perhaps because of
  development of skills with program implementation
  in and outside the Ministries

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The case of the Netherlands

• Production and allocation of housing
  traditionally firmly in the hands of public
  agencies (municipality level, mostly)
• Long tradition of housing allocation systems,
  especially of inexpensive part of stock
• The system of government control was developed to
  respond to acute housing shortages (WWII)
• Qualifying households for new construction
• Who would be allowed to live there?
• How to rank households on the waiting list?

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The Netherlands

• Allocation controls not equally strict for all
  types of housing
• Even if allocation of private housing is not
  strictly controlled by the government, municipal
  regulation did often dictate the households to
  which a landlord may rent his property
• 1960s and 1970s shortage had subsided ? rents
  deregulated and allocation controls abolished
• Return to free market principles to decrease the
  burden of housing subsidies, but not without
  putting production stimuli in place

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The 1990s and after

• Distribution model starts with registration of
  housing candidates on the waiting lists
• BASICS OF MOST SYSTEMS
• Eligible criteria to register for (socially)
  rented housing must be met by households
• Reshuffling of the waiting list by ranking the
  applicants, based on score card
• Points are awarded according to household and
  current housing situation, and the duration of
  registration

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Distribution model

• 4. Vacant dwelling offered to the individual with
  the most points
• 5. Three suitability criteria relationship
  household size and housing type, relationship
  income and price dwelling, and suitability in
  terms of ties with the neighbourhood, among other
  things (emplacement policy sanctions deviation
  from the waiting list and exclusion of groups)

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Distribution model

• Drawbacks little freedom of choice and long,
  passive, waiting periods
• New emphasis in government services on customer
  and choice in public services
• Towards more market-oriented social housing
  sector
• A new allocation model choice based letting
  model
• Shift from need to choice

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Choice based letting model

• House seekers may react to vacancies advertized,
  but only those deemed suitable for them
• Criteria length of residence, duration of
  registration, and age (and what type of dwelling
  the house seeker may leave behind)
• Vacancy will be offered to the household that
  ranks the highest, and this person may accept of
  reject
• Passed on to the next applicant on the ranking
• After selection of tenant, rankings are
  published, so that other applicants may see how
  well they did

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Choice based letting model

• The new model is more appreciated by home seekers
• Current debates
• To what extent may local authorities give
  priority to local home seekers?
• How does preferential treatment for local home
  seekers relate to European Union regulations that
  EU residents have the right of free movement and
  residence?

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The supply model

• Variant to choice model!
• Housing is advertised
• Registration by home seekers
• Home seekers must react to ads
• Sequence criteria longest registration duration
  or duration of stay in previous dwelling
• Suitability criteria least expensive dwellings
  for lowest-income families, large dwellings for
  larger households, present income is decisive

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Advantages of supply model

• Transparent, results can be checked
• More objective, less discriminating or exclusive
  than distribution model

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Different historic context of the Dutch case

• Motivation government to intervene economic
  recovery after WWII
• Large social housing stock (2002 35, within
  inner city of Amsterdam in 1970s 80)
• Very small private rented housing stock (2002
  10)
• In countries with a small social rented stock,
  the choice letting model would be much less
  relevant!

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Historic context of the Dutch case

• Housing market remains unbalanced, so government
  keeps intervening
• Shift in emphasis towards free market would not
  solve problems without creating new ones
• Housing is considered important in the
  functioning of society

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Attention for allocation of rented housing is rare

• A lot of literature on this topic from the
  Netherlands
• United Kingdom also has a large body of
  literature on this topic
• Also the only countries that use choice based
  allocation models
• Ireland and Spain waiting lists are increasingly
  replaced by lotteries ? more transparent and
  fairer allocation

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Access, exclusion, affordability and allocation

• Housing access decision in literature is not
  always separated from housing allocation decision
• In the Netherlands they are separate!

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Literature for this session

• Bourne, L.S. (1981), The housing allocation
  process and urban housing markets. In The
  geography of housing. Chapter 4. p. 69-92.
• Hulchanski, D. M. Shapscott (2004),
  Introduction  finding room in Canadas housing
  system for all Canadians. In J.D. Hulchanski
  M. Shapcott (eds. 2005), Finding room. Policy
  options for a Canadian rental housing strategy.
  Chapter 1. p. 3-14.