Homeownership as Social Policy in the US: Risk and Responsibility
After the Subprime Crisis
Rachel G. Bratt, Urban and Environmental Policy and Planning, Tufts University, Medford, United States of America
rachel.bratt@tufts.edu, tel. 617-627-3394, fax. 617-627-3377
Homeownership in the US has been used as a vehicle to promote a variety of political, economic and social goals. From the enactment of the Homestead Act in the 1860s, to the recovery measures created after the Great Depression of the 1930s, through the latter half of the 20th century and into the new millennium, a number of homeownership programs were created with each having one or more social policy objectives. These have included: promoting confidence in the government; giving people a stake in society; quelling social unrest and racial tensions; providing opportunities to nonwhite and low income households to enable them to get a foothold in the “American Dream;” stabilizing deteriorated neighborhoods; promoting racial integration; reducing economic disparities; and promoting wealth accumulation. After briefly reviewing how these objectives were expressed during key phases of federal involvement with homeownership, the remainder of the paper addresses the recent subprime crisis and questions the extent to which little or no risk and responsibility on the part of both homeowners and mortgage lenders has undermined our ability to achieve some or all of the longstanding social objectives of homeownership. In the course of this exploration, the paper articulates how the system for financing homeownership moved away from a basically “mom and pop” operation, where financial institutions originated and kept loans in their portfolios, to deregulation in the 1980s, and an increasing trend toward homeownership finance becoming tied to the capital markets. How have these various changes altered traditional conceptualizations of how risks and responsibilities should be carried by homeowners and lenders? And what have been the resulting impacts on social policy goals, particularly those involving opportunities for low income, vulnerable households? The paper concludes with observations about the types of risks and responsibilities that both lenders and homeowners must assume if mortgage lending transactions are to be successful. On a broader level, in order to realize the social goals of homeownership, specific interventions and safeguards must be instituted that will counter the depersonalized, risk-shifting nature of our contemporary mortgage finance system.
Housing and Demographic Change
John Doling, College of Social Sciences, University of Birmingham, United Kingdom
j.f.doling@bham.ac.uk
The focus of this paper is demographic change, specifically the ageing of the populations of advanced economies. Following a review of long term trends and, drawing on a number of literatures as well as recent research, it argues that, in comparison with other explanations such as globalisation and the growth of neo-liberalism, the significance of demographic change for housing systems has generally been under-emphasised. In particular, it presents evidence supporting the position that aspects of the development of home ownership markets reinforce, and are reinforced by, aspects of demographic change.
Slippery Footholds on the Housing Ladder:
Young People’s Housing Opportunities in Japan’s Home-Owning
Society
Yosuke Hirayama, Graduate School of Human Development and Environment, Kobe University, Japan
yosukeh@kobe-u.ac.jp
In Japan, it has increasingly been becoming more difficult for young people to acquire a foothold on the rungs of the housing ladder. A notable decrease in the number of youths who are following conventional life-courses implies a challenge to the traditional organization of Japan’s home-owning society. This paper analyzes the housing situation with young people with particular reference to changes in public-policy practices relating to family, employment and housing. In post-war Japan, the conservative nature of public policy has been maintained in the sense that it has continuously advantaged middle-class families in purchasing a house to lead a conventional life-course. With the global diffusion of neo-liberalism, however, since the middle of the 1990s the Japanese government has reoriented its policy formulation towards accentuating the role of the market economy in providing employment and housing. Public-policy arrangements have thus become characterized by a combination of conservative and neo-liberal approaches. Young family households have been protected by conservative policies in accessing the owner-occupied housing sector. Alternatively, an increasing number of parental home dwellers and single people, who have been out of the protection of conservative institutions, have particularly been affected by neo-liberal implementation of policies, finding themselves excluded from the residential-property ladder system. The paper highlights the differentiation in young people’s housing experiences that has facilitated transformations in Japan’s homeowner society.
Understanding the Role of Home-Ownership in Post-Socialist
Countries: Between Macro Economy and Micro Structures of
Welfare Provision
Srna Mandič, University of Ljubljana, Slovenia
srna.mandic@fdv.uni-lj.si, tel. (01) 5805 222, fax. (01)5805 213
Post-socialist countries, like the rest of developed world, are faced with new pressures and insecurities arising from globalization and demographic change and with new financial market products soon knocking on home-owners doors. However, when dealing with housing and its wider role in provision of welfare, post-socialist countries seem to be facing many ambiguities and dilemmas. While political and analytical thrust was on promoting market through housing reforms and housing privatization, the final results, when compared to most of West European countries, seem quite specific and hardly understandable as far as home-ownership rates by far exceed the figures of nations, previously considered as 'home-owning countries'. While this raises a number of questions, in the paper two topics are discussed.
First is the empirical evidence about cross-national variability in the size and social composition of home-ownership across EU27. For the group of post-socialist countries, huge dissimilarities are highlighted not only in comparison to West European countries, but also within the group, leading to a number of questions to be raised.
The second issue is about where to look for the explanatory framework for these differences. A wide literature on 'transitional housing reforms' contributed to understanding of home-ownership within the framework of macro economic and political systems and their changes (basic features of the East European Housing Model – 'property rights' and 'state planning' being inherently related to it). However the role of home-ownership may be observed also within a complex framework of welfare provision. While Kemeny (1995:173) pioneered in arguing how housing tenure and welfare provision are interrelated at the macro level (housing being 'key area in the construction of welfare states' and related to the nature of pension and health inssurance systems), authors have lately also pointed out the interrelation on meso and micro level. Particularly important was that the experience from non-Anglo-Saxon countries entered the research agenda, most notably South-European group (Allen et. al 2004) and East Asian region, demonstrating the significance of housing in ways how 'family procure, use and share other welfare goods' (Ronald 2007:477). This perspective indicates a new avenue of analysis, specifically important for post-socialist countries as new points of reference and different frameworks for comparisons emerge. Some of the related research issues and dilemmas are raised and hypothesis offered.
Risk Mitigation on Mortgage Markets: the Role of Institutions
Peter Neuteboom, OTB Research Institute for Housing, Urban and Mobility Studies, Delft University of Technology, The Netherlands
P.Neuteboom@tudelft.nl, tel. +31-15 - 2787695
Under pressure of for instance the ongoing globalisation, the traditional triangle of homeownership, labour markets and social security is redefined. This will obviously lead to a different risk distribution between the financial sector, the state and individual households. In this process, individual (prospective) homeowners seem to be loosing ground This is an unwelcome trend, certainly in times when society (likes to) puts more trust on the market to find housing solutions for their citizens.
Therefore, there seems to be a growing need to invent new institutions that can mitigate the risk for individual homeowners. These new institutions are not synonymous with new forms of state intervention; the market can help by introducing new mortgage and/or insurance products. Nowadays, different solutions are being introduced (or discussed) across Europe, consisting of new forms of state provision, improved consumer rights etcetera. However, given the differences in housing context, it might be the case that what works well in one country is not necessarily the best solution for another. We therefore need to extend our knowledge on the relationship between institutions, (mortgage) risks and risk distribution. Policymakers will then have better insights on how to alter the existing set of institutions to cope with the rapidly changing environment and (prospective) homeowners will remain more at ease with their housing situation and financial commitments.
This paper will offer an overview of contemporary developments - with an emphasis on North-west European countries - as well as a new framework in analyzing these issues.
The Housing Pillar of the Mediterranean Welfare Regime:
Family, State and Market in the Social Production of Home
Ownership in Italy
Teresio Poggio, Dept. of Sociology and Social Research, University of Trento, Italy
teresio.poggio@soc.unitn.it, tel. +39 0461/881406, fax. +39 0461/881348
The expansion of home ownership in Southern Europe after WWII is largely due to some specific features of the Mediterranean housing systems, in addition to generalized improvement of the economic and living conditions. These specific traits include a lack of secure and affordable alternatives in the rental sector, the opportunity to become homeowner via self-building and other non-market channels and an historical bias toward home ownership in housing policy. Last but not least, family plays a key role in both the production of home ownership and its funding.
However, the expansion of this tenure has not happened in vacuum. It also reflects peculiarities of the national welfare systems and has interactions and consequences on them. Asset building through home ownership has been a rational household strategy in a context of limited welfare provision -suggesting the need for precautionary savings- and of limited alternatives for investments, due to an underdeveloped financial market. Home ownership has played a direct social security role for the irregular workers who do not contribute to any pension and insurance scheme.
A certain degree of social re-stratification also took place, as households with limited resources from the labour market were allowed to convert their social and technical capital into housing wealth through self-building, which has often been illegal.
Furthermore, relationships exist between the important role of family support for home ownership and the familialistic traits of Southern European care system. The intergenerational production and transmission of home ownership is traditionally linked to the proximity between parents and their adult children. Such a proximity allows an easier mobilization of in-kind resources useful for granting access to home ownership by the younger members of the family: a plot of land which can be built on, parents and relatives’ own labour for self-building, a family dwelling allocated for free. On the other hand, proximity is also a reliable foundation for further mutual support and especially for care. Family support for home ownership is then embedded in a family-based welfare system and it also contributes to the reproduction of such a model of welfare, especially when care is an issue.
Finally, intergenerational transfers supporting access to home ownership stand as a core element within the overall system of private transfers from ascendants to the new generation. In countries where welfare state transfers are primarily targeted on the elderly, this private circuit of transmission partially compensates for the welfare system’s bias against young citizens.
Both the social production and the funding of home ownership has recently become more market-driven. Even so, families remain a major agent in the housing system. They are coping with this new context and with increased housing prices, while governments are further promoting home ownership under unfavorable market conditions.
A discussion on the expansion of home ownership and on its interactions with the above mentioned other dimensions of welfare is presented in the paper, assuming Italy as an exemplary case. The relative roles of family, state and market are discussed. More recent trends and problems of such a familialistic home ownership regime are also presented.
Home Ownership and the Nordic Housing Policies in the
‘Retrenchment Phase’
Hannu Ruonavaara, Department of Sociology, University of Turku, Finland
hanruona@utu.fi, tel. 358-2-333 5382, fax. 358-2-333 5080
Though Nordic countries (=Denmark, Finland, Iceland, Norway & Sweden) are often considered to represent a shared Scandinavian model of welfare, their welfare arrangements differ from each other in a number of specific policy fields, not least in housing policy. There is no one Nordic housing regime, though arguably there are shared features. Recently the historical development of Nordic housing policies has been analysed in a collaborative comparative study. In this paper the findings of this study concerning the nature of national housing policies are presented and the different policies are compared on two dimensions: the scope of policy and its institutional basis. The central institution concerning housing provision is housing tenure. In Norway and Iceland housing policy is based on home ownership, in Denmark on renting, in Sweden and Finland on both tenures. Accordingly the position of owner occupation has been different in different national housing policies. In recent times all the Nordic countries have encountered similar pressures towards less state intervention and more market-oriented solutions in housing provision. The effects of the public sector’s retrenchment from housing provision on the position of home ownership are discussed in the paper focusing specifically on the countries where policies are most challenged.
Housing and Financial Markets: Making the Most of a Marriage of
Convenience
Susan J. Smith, Durham University, United Kingdom
SusanJ.Smith@durham.ac.uk, tel. 0191 334 1946
The steady integration of housing, mortgage and financial markets is a hallmark of the modern economy. The prevailing wisdom, boosted by the credit crisis of 2007-8, is that this has already gone too far; that processes tying households accounts into global finance could, and should, be unravelled. This paper considers a different view: that the integration of housing and financial markets has, in some important senses, not gone far enough. Certainly the encounter is lop-sided, focussing as it does on the credit/debt rather than investment/equity side of the housing equation. That is, the main link between housing and financial markets to date has been via the securitisation of lending and incorporation of mortgage backed securities into complex credit derivatives. But there is already a concerted attempt to redress the imbalance, by creating a market for housing (asset) derivatives. This paper asks what could be achieved for housing policy and provision if this ‘synthetic’ housing market succeeds; it also considers what might be lost if it fails.
Home Ownership Continuing Dream or an Approaching Nightmare
David Thorns, School of Sociology and Anthropology, University of Canterbury, Christchurch, New ZealandDavid.thorns@canterbury.ac.nz
Home ownership in New Zealand and Australia has long been seen as the ideal tenure. It has been underpinned both by a strong belief that it is the normal tenure and that not achieving this reflects badly on the persons concerned. Up until the 1980s there was also a raft state polices to encourage and enable home ownership. The neo-liberal turn in the 1980s and 1990s resulted in restructuring of economic directions and changes to tax and macro economic policy setting creating conditions for the growth of greater income inequality and more targeted forms of state assistance in the housing policy area. This moved support largely to demand side assistance with greater reliance on market based solution.
From 1990 through to 2008 the housing market has experienced boom and slump conditions but overall house prices have risen faster than wages creating an “affordability gap”. The continued rise in home ownership now no longer seems assured. In New Zealand, overall rates have begun to fall since 1991 down from 73% to 63% by 2006. More significantly there is growing evidence of a steep decline in the rates of home ownership in the 20-29 and 30-39 year old age groups within both New Zealand and Australia.
The key question this raises is whether this is a structural shift or a short run deferment. Complicating the question is the end of the recent boom and a the signs of a recession in the housing market, in part as a result of fiscal policies and the subprime market failure in the US. This has created a downward movement in house prices and increasing housing stress where mortgage costs are still rising due to global instability in credit, credit company failure and inflationary pressures that being “managed” largely through interest rate rises.
Arising from the changes are significant questions about the long run viability of home ownership and the policy responses that are required to address the decline. Politicians and public sentiment still supports home ownership as the preferred form of tenure for both social and economic reasons. However its attainment may now be shaped even more by intergenerational inequalities and transfers and broader economic and social policy setting than purely housing focused policies.
Owner-Occupation in an Increasingly Uncertain World: the English
Experience
Christine M E Whitehead, London School of Economics and the Cambridge Centre for Housing and Planning Research, United Kingdom
C.M.E.Whitehead@lse.ac.uk
Owner-occupation in England grew rapidly during the 1980s as a result of deregulation of finance markets; income growth; and public policy, notably the Right to Buy. Thereafter the proportion of owner- occupiers continued to increase but more slowly, especially after the turn of the century.
There has been only one major downturn in the housing market since the rapid growth of the 1980s – starting around 1989/1990. During that housing crisis large numbers of households were over-borrowed both against their income and the value of their properties. So when the economy went into recession, inflation increased and joblessness rose rapidly, many households lost their homes or found themselves in negative equity – and the upturn took some five years to emerge.
Since then, apart from a small downturn in the early 2000s, the housing market has been buoyant, and owner-occupier households have increased both their housing investment and their housing debt very considerably. Affordability has worsened and households have found it difficult to enter owner-occupation without assistance (either personal or governmental). The current environment provides a stress test both for the robustness of the housing finance market and for individual owner-occupiers. It also raises more fundamental questions about the rationale of owner-occupation for those who must of necessity face significant risks when the economic environment worsens.
This paper examines the major factors that help to explain the increase in owner-occupation and housing debt over the last twenty years and compares the experience of the early 1990s with the current situation. It also looks at more fundamental issues including why governments regard owner-occupation as desirable; the appropriateness of polices that the UK government has introduced to maintain and extend owner-occupation; and the robustness of the sector into the longer term.
The American Nightmare: Reflections on this Mess we’re in
Manuel B. Aalbers, Amsterdam institute for Metropolitan and International Development Studies (AMIDSt), University of Amsterdam, The Netherlands
m.b.aalbers@gmail.com
Decades of promoting homeownership have taken their toll. For the first time in history, it seemed that everyone could buy a house – mortgages were abound and unbound. Sub-prime loans included households formally excluded from homeownership, but many of these loans were also granted with the idea to take title to the property as soon as possible and many more sub-prime loans were granted to households with prime credit. Classical economic theory cannot explain why people made choices that seem to go against their interest. We therefore need an institutional analysis to examine the roots of the current mortgage crisis, and by extension, the credit crunch. Such an analysis shows how all kinds of actors involved, from government to mortgage brokers and from major banks to ”housing academics” have made mistakes. Housing advocates have often been blamed as they fought to expand homeownership and credit opportunities to disadvantaged groups, but a closer looks shows us that this charge is heavily overplayed if not downright absurd: the current mortgage mess is in the first place the product of the mortgage industry in cooperation with various government and government-associated institutions.
Effective Financing of Housing and Home Ownership in Nigeria: A
Critical Analysis of the National Housing Fund (NHF)
Adebayo , Abimbola Adedayo, Department of Architectural Technology, Federal Polytechnic, Ado-Ekiti, Nigeria
bimbola_davids@yahoo.com, tel. 234-8030684316
Keywords: Home Ownership, Housing policies, National Housing Fund, Mortgage Finance Nigeria’s drive toward ‘housing for all’ has so far been an uphill task that seems more of an illusion than reality. Successive efforts to meet every set target have failed as housing deficits now stands at over 16 million units in Nigeria. Most urban dwellers in Nigeria today live in shanty-towns and dilapidated houses without basic amenities, unsanitary conditions or running water. Estimates show that Nigeria needs an average of 1 million housing units per year not only to replenish decaying housing stock, but also to meet rising demand. The reason for such dismal conditions in the housing market is not far fetched. With a population estimated at over 130 million and rising, it is practically impossible to provide affordable housing for middle and low income Nigerians who constitute the bulk of the population, without a viable long-term mortgage lending scheme. The National Housing Fund (NHF) was created as a vehicle to mobilize savings and disburse loans to qualified low to middle income home buyers. Unfortunately, most of these loan facilities remain on the balance sheet of either the primary lending institution or Federal Mortgage Bank of Nigeria (FMBN) until maturity. Such practice is not only inimical to the ability to expand credit and create liquidity but also imperils the lender. In this study, a critical analysis of the National Housing Fund is carried out to identify the major constraints militating against the performance of the National Housing Fund from being an efficient policy instrument for ameliorating workers socio-economic difficulties in owning befitting houses. Suggestions are made as to the line of policy and practice that could effectively increase the growth rate of home-ownership amongst Nigerians.
Mortgage as a New Trend in Crisis, Reconstruction and Housing
Finance in Turkey
Eylem BAL, Department of City and Regional Planning, Faculty of Architecture Dokuz Eylul University, Izmir, Turkey
eylem.bal@deu.edu.tr, tel. +90 554 822 69 56 & +90 232 412 84 79
Key Words: Mortgage, Housing Policies, Economic Crisis, Restruc uring, Turkey. t
In the 21st century, house was beyond being only a shelter- and living-oriented use but became one of the most favorite objects of a consumption-oriented culture which could be bought and sold, hired and over which value could be earned together with the trends arising depending on sociological, economic and spatial changes. Today the housing market constitutes one of the most fundamental spheres directing the market mechanism particularly in big cities where globalization has its effects felt intensively. At this point, when the historical development of house ownership and housing market in Turkey is examined, it is observed that a trend for meeting the need was dominant at the initial stages of urbanization upon the declaration of the Republic in 1923 but basic trends such as squatter house, land development (yapsatçılık) and mass housing emerged until the 1980s in parallel to the urban developments that became increasingly complex. It is observed that legal regulations concerning mass housing were concentrated and the production of such a house style was intended to be made efficient to this end after 1980, when Turkey switched from inward-oriented import substitution development policies to outward-inward-oriented liberal economic policies. It is observed that upon the arrival of the 1990s, types of house acquisition such as gated communities and residences for groups of upper-middle level of income and high-level of income became outstanding. When the 2000s are considered, it is observed that a long-term stagnant housing market revived particularly since 2003. The key sector to stimulate the economy during the post-2001 crisis experienced in Turkey became clear as the construction sector that gained momentum to many sectors as well as itself. At this point, one of the most fundamental trends in overcoming the economic depression in the post-crisis period was to direct the route of global and local capital to profitable investments to be developed in the city and on the urban territory. The reflection of this trend on the housing sector is observed to be Mortgage, which has become outstanding as a consequence of new searches in the housing finance. As a matter of fact, Mortgage gained a legal quality with “the Law on Making Amendments in Various Laws concerning Housing Finance System No. 5582” dated 06.03.2007. This study focuses on Mortgage, which was put into use as a compensation mechanism in the reconstruction process of economy during the post-2001 economic crisis in Turkey, and, considering the main factors behind putting Mortgage on the agenda of housing policy in Turkey, it aims at examining and intending to interpret its position, effects and results within the housing policies and urbanization practice in Turkey.
Promoting Homeownership through Targeted Demand-Side Means
The Norwegian case
Rolf Barlindhaug and Kim Astrup, Department for Housing and Environmental Planning Research, Norwegian Institute for Urban and Regional Research (NIBR), Oslo, Norway
Rolf.barlindhaug@nibr.no, kim.astrup@nibr.no ,www.nibr.no
To provide every household the opportunity of affordable homeownership is a main goal in Norwegian housing policy. Currently the homeownership rate is around 80 percent, and only 4-5 percent of the housing stock consists of social rental housing. The leases of these dwellings normally have duration of three years, and it is desirable that tenants after this period relocate to the private rental market, or preferably purchase their own home. In order to achieve a high ownership, rate demand-stimulating policy instruments, such as subsidized loans, investment grants and housing allowances, are essential. Local authorities manage and allocate these subsidies to the most disadvantaged applicants on behalf of the State Housing Bank.
There has been a concern from the central government to whether there is a sufficient degree of harmony and consistency between these policy instruments, and to what extent they individually, and in conjunction, are capable of promoting home ownership among low income groups.
We have developed a general microeconomic framework in order to analyze how household’s creditworthiness varies with different housing policies. The Norwegian policy instruments are analyzed within the analytical framework, and are then compared with the corresponding UK and Irish government schemes for low-cost home ownership, such as Shared Ownership and Homebuy. We show by simulating the model that the current design of Norwegian housing policy instruments is inapt to promote home ownership among low income households. Finally we discuss to what extent the State Housing Bank by adopting the UK/Irish approach to low-cost home ownership, can enhance ownership rates among low income household further.
Homeownership for all the Young?
Kees Dol, OTB Research Institute for Housing, Urban and Mobility Studies, Delft University of Technology, The Netherlands
C.P.Dol@tudelft.nl, tel. +31-15-2782513
Home ownership has increased in many countries due to an often interrelated mix of government ideology, cuts in social housing provision, deregulation of financial markets and preferences of the consumer. During spells of house price increases some politicians may think the capital gains made by the growing population of home owners could be used as an alternative form of pension or old age welfare provision. In such a line of reasoning home ownership may be a strong medicine for the oncoming pension crisis and perhaps even a motive for further cuts in pension or old age welfare provision. In the case of Sweden, Kemeny (2005) suggests that young people have become aware of such ideas and will attempt to enter home ownership at an early stage of their household career. However, in spite of the growth and increasing popularity of home ownership among the general public, for many young people home ownership may not be the best choice in this stage of life. Partners come and go before mister or miss ‘Right’ is found and many young people will grab a series of employment opportunities before they ‘settle down’ at the beginning of their thirties. Such quick changes in the life course may demand flexible housing solutions, rental housing being much more flexible because a move in this specific tenure normally involves relatively small costs. Although buying a dwelling during a time of house price increases can be attractive because any moving costs are easily recovered, a house price fall can lead to a situation where negative equity may severely curb the mobility.
In this paper, we try to establish how the growth of home ownership in The Netherlands has influenced tenure patterns of young people. Under which personal circumstances do they prefer homeownership? Does this comply with the focus on home ownership in Dutch housing policy?
Housing Implications of Social, Spatial and Structural Change – Key
Issues
Joe Flood and Emma Baker, Southern Research Centre AHURI
The researchers are affiliates of the AHURI Southern Research Centre at Flinders University, Australia
Joe Flood: urbanresources@bigpond.com
The 2002 report AHURI Final Repor No. 22 Housing implications of social, spatial and structural change by Judy Yates charted changes in home ownership in Australia over the turbulent period 1986-1996. This project covers the same ground over the period of recovery 1996-2006. However it extends the original methodology in a number of ways, and ventures into more difficult territory – relationship change, the complications of market economics, the determinants of tenure choice, and the impact of economic inequality.
t
This paper will summarise progress on the study, discussing extensions in methodology and the changes in the global and policy environment under which Australian and global housing markets operate and will operate in the future.
A Lever for Change?
Housing and Welfare State Reform in Western Europe
Wouter PC van Gent, Amsterdam Institute for Metropolitan and International Developmental Studies, University of Amsterdam, The Netherlands
W.P.C.vanGent@uva.nl
The relationship between housing and the welfare state has been subject to academic debate for some time. Some claim that the market component of housing does not match the market-oriented and decommodified character of other welfare services. Other scholars, notably Jim Kemeny, view the housing system as an integral part, or as a cornerstone, of the welfare state. A third synthesising view, put forward recently by Peter Malpass, is to regard the relationship between housing and housing policies within the context of the policy and politics of welfare state reform. The British case offers some evidence of housing policies, more specifically those related to the promotion of home ownership, serve the additional purpose to move towards an asset-based welfare state where future reforms in social provisions are easier to make. This paper sets out to explore whether similar claims can be made elsewhere. More specifically, the question is whether housing is being used as a lever of (welfare state) change in Sweden, the Netherlands and Spanish Catalonia. The paper shows that there are indications of a relation between housing policies and welfare state reform in these cases. However, differences in institutional frameworks and histories of welfare state and housing systems result in different strategies and directions of reform. The paper ends with a discussion on different levers of change, and particularly on the role of neighbourhood regeneration policies as a means to instil tenure change and intervene in housing markets.
Home Ownership and Use of Housing Capital
Lars Gulbrandsen, Norwegian Social Research, NorwayLars.Gulbrandsen@nova.no
From 1993 and until 2007 the housing prices in Norway more than doubled. This increase raised the net housing capital of Norwegian home owners and contributed much more to these household’s wealth accumulation than their pay off. For some years Norwegian banks have tried to tempt these home owners to take new loans for other purposes with their free value – the difference between rest of the home loan and the market value of the house - as security. For long time Norwegian home owners showed little interest in such loans. In the last two years however, the banks have succeeded in a considerable degree in this field and have strongly increased their sales of such loans arrangements. Today one third of Norwegian home owners younger than 65, have agreed on such a loan arrangement.
The paper explains the incidence of such loans arrangements by characteristics of the home owners as age, household composition, income, financial capital and financial stress and characteristics of the dwellings as market value, LTV-ratio, location etc. The paper focuses also on more general attitudes towards depleting house capital in old age, both as dependent variable and as possible explanation why some home owners choose to agree on such arrangements and why others choose to keep their house capital intact.
The paper is based on data from two nation wide representative surveys carried out in June 2006 and June 2008.
A Changing Village: Second Homeownership in Rhodes, South Africa
Gijsbert Hoogendoorn, Department of Geography, Rhodes University, South AfricaG.Hoogendoorn@ru.ac.za
Rural geographies have changed significantly over the past half century. These reconfigured geographies are increasingly denoted as evolving from a productivist to a post-productivist state and second home development has increasingly been implicated as contributing to such change. This paper considers this post-productivist contention in the context of Rhodes, South Africa. It is argued that second home development is contributing towards an emerging post-productivist countryside. This argument is developed through three sections of discussion and analysis. Firstly, changes such as diversification, dispersion and extensification within the post-productivist countryside, has predominantly coincided with the advent of an open agricultural economy which was ushered in during the first years of inclusive democracy in South Africa. Secondly, a subsidiary intention of this investigation is to delineate how second homeownership as part of the larger tourism industry has contributed to the economic diversification of the Rhodes countryside. Thirdly, a broad analysis of the impact of second home ownership is given with reference to its social and economic influence. The paper concludes that, coinciding with the post-productivist changes in the Rhodes countryside, second home ownership has contributed to job creation and has had a varied tourism and regional impact which has added much needed support to the economy of the town.
Shifting Trajectories of Home Ownership in Japan
Dr Misa Izuhara, School for Policy Studies, University of Bristol, United Kingdom
M.Izuhara@bristol.ac.uk
In contemporary Japan, ‘post-bubble’ housing debates are shaped by trends such as increasing social inequality in society, demographic change, and neoliberal policy approaches. For example, the post-bubble recession that led to a more flexible labour market has brought increasing instability at the start line of people’s independent lives, and gaps also exist in the housing assets context across and within the generations. In contrast to other policy areas such as health and pensions, neoliberal policy was fully accomplished in housing when key aspects of post-war housing policy were abandoned. In terms of demography, an idealised notion of the family-centred housing model now contradicts the reality of urban households. In this context, this paper explores in particular: a shift away from home ownership dominance; a shift away from a land-oriented housing system; and also a shift away from the conventional family-centred housing model in contemporary Japan. The paper addresses, for example, housing issues for single-person households which are the dominant household type in Tokyo, and also housing strategies for older home owners in relation to their care needs. Overall, the interaction between housing assets, social policy and demographic change will be used as a key analytical framework for the paper.
Housing Wealth Leakage, Return Migration and Transnational
Housing Markets: The Experiences of UK based African Caribbean
Home Owners
Dr Ricky Joseph, Centre for Urban & Regional Studies, University of Birmingham, United Kingdom
r.joseph@bham.ac.uk, tel. +44 (0) 121 414 7233, fax. +44 (0) 121 414 3279
A key development within the UK homeownership market in recent years has been the popularity in second homes. Much of the interest in this segment of the housing market has centred on motivations behind this type of investment, gaining better demographic profiles of homeowners involved in this activity, and assessing wider socio-economic impacts of second homes on local/regional housing markets. The experiences of ethnic minority homeowners have been sadly neglected within these discourses, due in part to the lack of reliable data on this sub-set of homeowners. The paper draws on the author’s life history doctoral research of 9 Caribbean elders in Birmingham and London. All of the informants established homeownership careers since their arrival to the UK, and are at various stages of investing in second homes in the Caribbean. Its central thesis is that housing wealth, accumulated throughout homeownership career, have enabled some post war labour migrants to engage in complex investment activities in the Caribbean as a prerequisite to return migration. The study brings together various strands of the housing wealth, second homes and return migration literatures in developing these perspectives. The theoretical framework used, combines financial, social and kinship networks, in exploring risks and opportunities of overseas housing investments and return migration planning. The cultural-economic perspectives gained, provides unique insights into complex housing wealth consumption among ethnic minority homeowners from a migration background. While its main focus is on micro-level experience and strategies, the paper argues ‘leakage’ of UK housing wealth have wider macro-level policy implications in our understanding of global housing markets. The paper concludes by drawing on UK and European experiences of overheated local housing markets, where second home activity is viewed as a key driver, in speculating how these concerns might play out in Caribbean housing markets where return migration activity is greatest.
Does Homeownership Empower Former Tenants of Social Rented
Housing?
Reinout Kleinhans & Marja Elsinga, OTB Research Institute for Housing, Urban and Mobility Studies, Delft University of Technology, The Netherlands
R.J.Kleinhans@tudelft.nl, tel. +31 (0)15 278 61 17
M.G.Elsinga@tudelft.nl, tel. +31 (0)15 278 32 46
Keywords: homeownership empowerment, sale of social housing, choice, The Netherlands , Homeownership is more than just a housing tenure in the housing market. In several countries we can speak about a homeownership ideology (Ronald, 2008). Homeownership is supposed to have positive effect on society and on individual households. This paper focuses on the effect of homeownership on former tenants of social rented housing in The Netherlands. The central issue is whether becoming a homeowner increases one’s experienced control over your life and one’s self esteem. In other words, to what extent can becoming a homeowner be a way of empowering people? Many Dutch housing associations are currently devising sale policies with the aim to empower their tenants and provide more freedom of choice.
We present the results of telephone surveys among 535 Dutch former tenants who bought their social rented dwelling and 602 others who decided not to buy. The main question is: to which extent do these two groups differ in their scores on empowerment scales as described earlier by Rohe and Stegman (1994), Kearns et al. (2000) and Kleit and Rohe (2005). Scales of “perceived control over life”, “self esteem” and “housing-related empowerment” were adapted and measured among respondents of both groups. The results show that tenants who became homeowners score higher on the control scale, but this difference with tenants can be completely explained by other background variables. Moreover, homeowners score higher on the scale of housing-related empowerment, but lower on the scale of self-esteem, net of other factors.
Innovative Social Sales Programs: Valuation and Risk Issues
Bert Kramer, ORTEC Centre for financial Research, Groningen, The Netherlandsbkramer@ortec.nl
Key Words: valuation, risk analysis, risk management, social housing, affordability
In recent years, Dutch housing associations have introduced a number of innovative types of sale. These innovative types of sale have in common that a house is sold to the tenant at a discount. In this way, buying a house becomes affordable for lower-income households. And the housing association obtains cash, which can be used for (social) housing investment. The different innovative types of sales differ in the conditions under which the house is sold. These conditions range from sharing the profit (or loss) at turnover, repaying the (indexed) discount at turnover or only buying the dwelling and leasing the land. Therefore, even if the discount is the same, the risk – return profile of the different types of social sale can differ. In this paper, we look at the valuation and the risk – return characteristics of three different innovative types of sale from a housing association perspective. We use Monte Carlo simulation to establish the expected cash flows and Net Present Values, and the uncertainties herein measured as Value at Risk.
Housing of Old Age Households in 10 European Countries
Jørgen Lauridsen1 and Morten Skak*, University of Southern Denmark** JEL Classification: R21 .Keywords: Homeownership
The paper is an extract of a study under the DEMHOW (Demographic Change and Housing Wealth) project financed by the under the EU Seventh Framework Programme for Research and Technological Development, which investigates the ways in which, across member states, demographic change and housing wealth are linked, and to use those investigations in order to contribute to policy making. The present paper uses SHARE to look at housing conditions for old age households in 10 European countries.
* Corresponding author: Department of Business and Economics, Campusvej 55, DK-5230 Odense M, Denmark. Phone +45 6550 2116. E-mail mos@sam.sdu.dk.
** The paper is written as a part of the DEMHOW (Demographic Change and Housing Wealth) project financed by the under the EU Seventh Framework Programme for Research and Technological Development.
Elderly Couples and Suburban Life in the Context of Japan’s
Homeowner Neighborhoods
Makiko Morita, Graduate school of Human Development and Environment, Kobe University, Japan
pineapple_711_1984@live.jp
In Japan, as in many other developed societies, post-war economic development, combined with government housing policy that promoted home-ownership, accelerated the development of suburban homeowner neighborhoods. Housing provision and neighborhood planning systems were organized to form a specific type of physical environment suitable for middle class couples with their children. However, along with the rapid aging of the population, the condition of suburban life has been drastically changed. On one hand, suburban neighborhood developments in Japan sought to emulate the western model of garden city. On the other, Japanese suburban couples have been different to those in western countries in the sense that life-courses and lifestyles have orbited around the combined demands of ‘salary-man’ working routines of husbands who have had very limited time to enjoy home and family life, and the Japanese housewife who has spent most of her time in the home and neighborhood community. As these suburban populations have aged and children left the nest, Japan’s elderly couples have had to substantially readjust their home lives and domestic roles. A growing debate in Japan has concerned conflicts that have emerged among retired suburban couples who have struggled to cope with their new lives together, which has been exacerbated by failures to communicate. While many older husbands and wives dwell together in good quality, single, detached, family houses, a notable phenomenon has been the propensity for such couples to spend their time separately in the home. Retired husbands in particular have found it difficult to adjust to a life at home and set in a suburban neighborhood. This paper draws on interviews with elderly suburban couples to explore the context of suburban transformations peculiar to Japan.
Differences in the Timing of Institutionalization between Renters
and Home-Owners in the Netherlands: The Effects of a Policy
Change in 1999
Jan Rouwendal, Spatial Economics Department, VU University Amsterdam, The Netherlands jrouwendal@feweb.vu.nl
It has been shown that in various countries homeowners move less often to a nursery home than renters. This may be related to the consequences such a move has for the person’s wealth, but it may also be due to differences in neighborhood ties and to the possibilities one has of organizing the healthcare that is needed by oneself. The aim of this paper is to study the relationship between moving to a nursery home and housing tenure status for the Netherlands where such a study has not yet been undertaken. An interesting aspect of studying data from this country is a policy change in 1999 that reduced the negative wealth consequences of moving to a nursery home for owner-occupiers. We use data from the Longitudinal Amsterdam Study of Aging (LASA).
One Step Beyond? The Limitations for Government Promotion of
Home Ownership
Rob Rowlands, Centre for Urban & Regional Studies, Birmingham Business School, University of Birmingham, United Kingdom
r.o.rowlands@bham.ac.uk
Britain has become a nation of home owners, or so we are told. Throughout the second half of the 20th Century and up to today, home ownership has grown. Research over the last 30 years has suggested that the majority of British households want to be home owners. Whilst a significant proportion are already owners, the dominance of a discourse around ownership has created challenges for government of how to assist others into being home owners. This paper contends that governments in the UK have reacted to the normalisation of home ownership over time by developing policies which assist households to become home owners. It argues that these policies respond to previous research highlighting the demand for home ownership whilst also directing further research to understand how many more people want to be home owners and their barriers to ownership. This paper suggests that this activity underpins and perpetuates the dominant discourse and assumes that ownership should be accessible for all. However, the extent of home ownership is not limitless or universal and not every household can be a home owner. Whilst recent analysis has focussed on the economics of ownership through affordability modelling, the qualitative aspects of these limits, particularly in relation to specific policy initiatives, are missing. Using evidence from a recent evaluation of a low cost home ownership initiative in England, this paper demonstrates that the construction oft he affordability problem has focussed on only the economics of the issue. Through reference to a social survey of households and in-depth interviews that the qualitative aspects of purchasing housing have not been fully considered but that these shape the demand for home ownership initiatives. The paper concludes by suggesting that the measurement of the “affordability problem” needs to be reconsidered and that policy makers need to reshape their response to this problem in response.
Homeownership, Housing Finance and the Elderly Population in East
Asia: The Case of Mainland China and South Korea
Hyun Bang Shin1 and Bingqin Li2, London School of Economics and Political Science, United Kingdom
h.b.shin@lse.ac.uk, b.li@lse.ac.uk
The aging population in the East Asian countries is a combined result of declined birth rate (either forced or voluntary) and increased life expectancy of the elderly. As a result, housing decisions of the elderly have become increasingly influential in the region’s housing market. Traditionally, housing decisions of the elderly people in East Asian countries were understood to have been made within the context of traditional support systems, which were largely based on family ties and the Confucian filial piety. In recent years, however, the elderly people’s housing decisions are constrained not only by their personal needs of care but increasingly by economic and societal changes that have taken place in recent decades. In this paper, we discuss social risks, opportunities and constraints faced by the elderly homeowners and prospective buyers in mainland China and South Korea where homeownership has come to be regarded as a ‘norm’ and dominate the policy discourse. We examine social risks generated by recent changes in welfare systems that have become increasingly residual; changes in the labour market; changes in the housing market and housing finance systems. Recent policy developments will also be reviewed to identify policy-induced market changes that may present opportunities for some but act as further constraints for others.
1
Lecturer in Urban Geography, Department of Geography and Environment, London School of Economics 2
Tenure Choice and Financial Security – Differences between
Generations
Janneke Toussaint, OTB Research Institute for Housing, Urban and Mobility Studies, Delft University of Technology, The Netherlands
J.Toussaint@tudelft.nl, tel. +31-15 - 2787570
In the current context of diminishing welfare states, economic instability and volatile house prices, the housing position might enlarge the gap between generations and between owners and non-owners in terms of securities and risks. The increasing pressure on state pensions is expected to make housing wealth more important for financial well-being at old age. Generally, the older homeowners dispose of a substantial amount of housing equity, which makes them considerably better-off than non-owners, or recent owners. Recent owners have relatively high mortgage debts and high housing expenses; and are thought to have more income security and cannot count on similar house price developments as in the past decade. Consequently, there is inequality in risks of homeownership.
In this paper we explore perceptions of Dutch households based on outcomes of a questionnaire survey. How are inequalities in securities and risks perceived by different age-cohorts and by homeowners and tenants? Is housing equity an element in households’ financial planning? And is homeownership therefore the preferred tenure, or is renting still a good alternative in the Dutch housing market?
Moving on from Shared Ownership? Mobility in the Intermediate
Market
Alison Wallace, Centre for Housing Policy, University of York, United Kingdom
aw152@york.ac.uk, tel. 01904 321487/0
"Facilitating access to homeownership is a key component of housing policy across the UK as it addresses a number of ambitions for both low to mid income households who aspire to own their own home and to the government who want to encourage asset-holding and the development of personal safety nets. Primarily these objectives are met by the expansion of a variety of low cost homeownership products on a shared ownership or shared equity basis, available primarily to first time buyers and promoted as a ‘foot on the housing ladder’. Much research in the UK has examined issues that relate to the potential demand for these products and the owners’ satisfaction with their home after purchase, but little has been known about the longer term outcomes for low cost homeowners, particularly with regard to whether or how people who purchased their homes using one of these low cost homeownership schemes are able to move on once their aspirations or housing needs change. This paper addresses these concerns by examining the mobility of shared owners across six case study areas across the UK."
The Client's Choice Programme: Perceptions of Housing Associations
and Tenants
Sake Zijlstra & Vincent Gruis, department of Real Estate and Housing, Faculty of Architecture, Delft University of Technology, The Netherlands
s.zijlstra@tudelft.nl, tel: +31-15-2787350, fax. +31-15-2783171
v.h.gruis@tudelft.nl, tel: +31-15-2783928, fax. +31-15-2783171
Keywords: Freedom of Choice, Social Housing Tenure, Empowerment, Te Woon,
r
In the Netherlands, several housing associations have started offering a major part of their housing stock with a purchase option. This allows tenants of new and existing dwellings to choose between entering into a standard tenancy contract and purchasing the dwelling. Sales options often have the possibility of offering a discount, provided that the dwelling is sold back to the housing association if the dwelling is vacated. Housing experts expect many positive effects of what is referred to as “Client’s Choice” programmes. However, many of the effects have as yet not been completely evaluated. In this paper, we will evaluate several effects based on tenants’ opinions. We will discuss the results of interviews held with tenants of two neighbourhoods in which the Client’s Choice programme has been carried out for several years. The interviews have shown that tenants generally appreciate having the option of purchasing their dwelling, but that their expectations of and experiences with the positive (side) effects of the Client’s Choice programme differ from those of the management of housing associations.
Acknowledgement:
This paper is a (heavily) revised version of a paper that we have p esented at the conference of the European Network for Housing Research held in Dublin, 2008.
