Transcript 1 GGR 357 H1F Geography of Housing and Housing Policy Session 7

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
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Web page: http://individual.utoronto.ca/helderman
Midterm answers and last week’s lecture slides are
available
Midterm preliminary results available
Announcements
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Available for you to pick up at the office in Sid Smith
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This year’s results:
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Last year’s results:
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Lowest 22; highest 88; average 52; mode 39; median 49
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 doctor’s note)
Announcements
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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?
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QUESTIONNAIRES
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Housing allocation, introduction
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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
Housing allocation
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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
The private market
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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
The public sector
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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
Goals of efficiency and equity
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Both consider efficiency and equity important
The public and the private sector handle their and each
other’s main goals with different criteria (costs, prices,
stock attributes)
Efficiency
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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
Equity
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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
Type of allocation system
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Mix between private and public
Ranging from laissez-faire to centrally planned society
Collusion
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Oxford’s 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:
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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
Functioning of the allocation system
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How are criteria established?
Are the criteria explicit?
Implicit  discrimination
Monitoring mechanisms
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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
Implementation of changes
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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
Housing markets
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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
Types of housing markets
Scale
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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)
The urban housing market
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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
The market mechanism
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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
Micro-economic approach
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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
+ behavioural elements
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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
Cost of realizing housing
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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
Cost of land versus other expenses
Single units
Ratio
quantity
land/
non-land
Multi-family
Apartments
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Price land output/ price non-land output
Segmented markets
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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
Segment criteria
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Submarkets: by tenure classes, structure types and
values
Households: income, family type, race or ethnic origin
Locations by status: inner city, inner suburban and
outer suburban
Decision-making micro level
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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
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
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Prices paid may be more than expected for similar
housing in a different area
Movements between areas are less than may have
been predicted
Allocation and class
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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
The institutional context
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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
CMHC
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Canada Mortgage and Housing Corporation (CMHC),
active since 1946
Canada’s 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
CMHC
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CMHC works to enhance Canada's housing
finance 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.
The public allocation system in Canada
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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
Recent history of housing allocation
programs
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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
Recent history of housing allocation
programs
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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
Housing allocation programs
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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
Welfare pluralism
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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
The case of the Netherlands
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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?
The Netherlands
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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
The 1990s and after
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Distribution model: starts with registration of housing
candidates on the waiting lists
BASICS OF MOST SYSTEMS:
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Eligible criteria to register for (socially) rented
housing must be met by households
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Reshuffling of the waiting list by ranking the
applicants, based on score card
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Points are awarded according to household and
current housing situation, and the duration of
registration
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Distribution model
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Vacant dwelling offered to the individual with the
most points
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)
Distribution model
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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’
Choice based letting model
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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
Choice based letting model
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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
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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 lowestincome families, large dwellings for larger households,
present income is decisive
Advantages of supply model
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Transparent, results can be checked
More objective, less discriminating or exclusive than
distribution model
Different historic context of the Dutch case
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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!
Historic context of the Dutch case
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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
Attention for allocation of rented housing is
rare
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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
Access, exclusion, affordability and
allocation
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Housing access decision in literature is not always
separated from housing allocation decision
In the Netherlands they are separate!
Literature for this session
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Bourne, L.S. (1981), The housing allocation process
and urban housing markets. In: The geography of
housing. Chapter 4. p. 69-92.
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Hulchanski, D. & M. Shapscott (2004), Introduction :
finding room in Canada’s 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.