the housing system - shaping futures · boelhouwer & van der heijden, 1992 it is important to...

TheHousingSystemAmechanismforincreasingwealth

andincomeinequality.Anythingelse?

DavidHulchanskiUniversityofToronto

12June2016

J David Hulchanski, University of Toronto

of 58 DRAFT 12 June 2016

1.  DefiniEon

2.  Criteriaforassessing

3.  Macrocontext

4.  Roleofhousingassets

5.  Current:Mechanismforincreasingwealthandincomeinequality

6.  Future:MechanismforadequateproducEon,choice&affordability

TheHOUSINGSYSTEM



DEFINITIONThe“HousingSystem”

1



Bourne,1981

“atypicallyvaguebutconvenientshorthandexpressiontoencompassthefullrangeofinter-relaEonshipsbetweenalloftheactors(individualandcorporate),housingunitsandinsEtuEonsinvolvedintheproducEon,consumpEonandregulaEonofhousing.”

“Itisthusamuchbroadertermthanhousingmarketorsector.”

4



Priemus,1983

•  thecomplexofactors,includingtheirmanyrelaEonshipsandinteracEons,thatareinvolvedinhousing.

•  thecontextisimportantinthedevelopmentofahousingsystem,parEcularlytheeconomic,demographic,poliEcalandspaEalfactorswhichinfluencethesystemandarethemselvesinfluencedbythehousingsysteminturn.

5



Boelhouwer&vanderHeijden,1992ItisimportanttomakeadisEncEonbetween

1.  theorganisaEonofthehousingmarket(theinsEtuEonalstructure),

2.  theactors(supply&demand),and

3.  housingpolicy.

Thesefactorsinteractwithexogenicfactors(thecontext)todeterminetheobjecEvecharacterisEcsofthehousingsystem.

6



HarryvanderHeijden,2013

ThehousingsystemreferstotheinteracEonbetweenactors&insEtuEonsinEme&space.

Itispartofawidersocietalsystem;thusitsdifferentpartsareinfluencedbybroader,externalfactorssuchaseconomic,socio-culturalanddemographictrends.

Housingsystemoutcomes,inturn,haveanimpactonthebroadersocietalsystem.

7



HarryvanderHeijden,2013ThemainconsEtuentsofahousingsystem:

•  DemandActors:households&theirhousingpreferences

•  SupplyActors:producersofhousing&housingservices(buildingfirms,developers,commercial&sociallandlords,andintermediaries,e.g.,realestateagentsandpropertyconsultants)

•  InsEtuEons:therules,normsandregulaEonsunderwhichasystemfuncEons

8



Whatshapeshousingsystems?

DemandSupply&

InsEtuEonsmeetinthehousingmarket

&generatetheoutcomesofthe

housingsystem9 HarryvanderHeijden,2013



Economic&DemographicPressuresplaythemajorroleinshapinghousingsystems

10 HarryvanderHeijden,2013,p.183



Whatabouttheroleofgovernmentinshapinghousingsystems


Housingpoliciesofbothright&lehofcentregovernmentsdidnotcorrelatestronglywiththeirideologicalstance.

Ratheritwasthe:– specifichousingmarketsituaEon– associatedfactorsofhousingtradiEon–  insEtuEonalstructureofthehousingmarket

GovernmentswilltrytoachievetheirpoliEcalobjecEveswithinthiscontext.



Whataboutchange,a'systemshih'inthehousingsystem?


1.  Changeisnotimpossible,butwillmeetwithstrongresistance.

2.  Thescale,funcEonandrelaEonshipbetweenthevarioustenuresisrelaEvelystable.

3.  TheinsEtuEonalandinstrumentalcontextinwhichhousingmarketsoperateanddevelopisalsorelaEvelystable.

4.  TherearefuncEonalimperaEvesofeconomicaccumulaEonandpoliEcallegiEmizaEon.



PRODUCTION,CHOICE,AFFORDABILITY

Criteriaforassessinghousingsystems.WhatisanInclusiveHousingSystem?

2



AnInclusiveHousingSystemoughtto

1.  sEmulateadequatehousingproducEon

2.  helpproduceamixofhousingchoice(tenure,locaEon,andquality)

3.  assistthosewhocannotaffordadequate,appropriatehousing

14 UUnniitteedd NNaattiioonnss CCeennttrree ffoorr HHuummaann SSeettttlleemmeennttss,,

SSuuppppoorrtt MMeeaassuurreess ttoo PPrroommoottee LLooww--IInnccoommee RReennttaall HHoouussiinngg,, 11999933



HousingSystemOUTPUTS

1.  Housingstock(size&composiEon)

2.  ProducEonlevel(new&rehab)

3.  DistribuEontohouseholds

4.  Cost(expense-to-incomeraEo)

15 Boelhouwer&VanderHeijden,1992



DifferentHousingSystemshavedifferentmixofHousingTenure

HOUSINGTENURE:ThetermsandcondiEons(rights&responsibiliEes),legalandcultural,bywhichhousing

isowned,occupied,andmaintained.

16

Tenure CA UK NL SE DEOWN 69 63 58 40 42

PRIVATERENT 26 18 10 20 53PUBLICRENT 2 15 -- 18 5*

N-PRENT 3 3 32 22* --Note:roundedoffapproximaEons;*=itscomplicated/mixed



MACROCONTEXT:INEQUALITY,TAXREVENUES

TheHousingSystem

3



18



19



20



DividedSocieEes:InequalityisaChoice

“Iseeusenteringaworlddividednotjustbetweenthehavesandhave-nots,butalsobetweenthosecountriesthatdonothingaboutit,andthosethatdo.

“SomecountrieswillbesuccessfulincreaEngsharedprosperity—theonlykindofprosperitythatIbelieveistrulysustainable.

“Otherswillletinequalityrunamok.”

JosephSEglitz,2013



HOUSINGASSETSTheHousingSystem

RayForrest,2008

4



HousingAssets:PolicyQuesEons

•  Isthereadifferencebetweenpeoplewithandwithouthousingassets?

•  Havehousingassetsbecomemoreflexibleand‘liquifiable’duetopublicpolicy?

•  DoeslocaEonmater(country,region,city,neighbourhood)intermsofhousingassets?

•  IshousingplayingalargerpotenEalroleinsocialoutcomesthaninthepast?

23



RayForrest,2008

24



LifeCourseImplicaEonsofHousingAssets

“whoyouare,whereyouare,and

whenyouachievehomeownership

arecriEcaldeterminantsof

futuretrajectories.”RayForrest,2008

25



TransformaEvePotenEalofHousingAssets“theposiEveandnegaEveimpactsofhousingassetsinrelaEonto•  socialstraEficaEonandsocialinequality,•  thedistribuEonofwealthanditsdeployment

withinandbetweenhouseholdsandgeneraEons,

•  themacro-economicconsequencesofremortgagingandequityrelease,and

•  theunevenspaEalimpactoftheseprocesseswithinciEes,regionsandglobally.”RayForrest,2008

26



TransformaEvePotenEalofHousingAssets

“BytransformaEvepotenEalIamreferringto…and

•  theunevenspaCalimpactoftheseprocesseswithinciEes,regionsandglobally.

Torontoexampleàà

27



Socio-SpaEalPOLARIZATION



81%

80%

69%

61%

46%

34%

30%

15%

3%

3%

7%

7%

12%

12%

27%

23%

2%

3%

5%

8%

14%

20%

24%

40%

7%

7%

8%

9%

13%

16%

2%

2%

7%

8%

11%

15%

15%

19%

16%

20%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

1996

2006

1996

2006

1996

2006

1996

2006

Population by Visible Minority Status 1996 and 2006, Three Cities of Toronto 1970-2010 and Jamestown

White Black South Asian Chinese Other

City #1: Average Individual Income Increased 20% or More

City #2: Average Individual Income Less than 20% Increase or Decrease

City #3: Average Individual Income Decreased 20% or More

Mount Olive - Silverstone - Jamestown Neighbourhood Improvement Area (43% Income Decrease)

Notes: Income is census tract average individual income for persons 15 and over, before-tax. Income is measured relative to Toronto average and change is in terms of percentage points, 2010 versus 1970. Income 2010 is for all taxfilers. Constant 2001 census tracts boundaries.



LifeCourseImplicaEonsofHousingAssets

“Thedivisionsbetweenthehousingassetrichandthehousingassetpoor

canbeconceivedofatdifferentspaEalscalestoevoke

amulElayeredandintertwinedgeographyofadvantageanddisadvantage.”

RayForrest,200834



AMECHANISMFORINCREASINGWEALTH&INCOMEINEQUALITY

TheCurrentHousingSystem

5



Pikety’sTheoryThecoreofPikety’stheoryormodelisthat

1.  anunequaldistribuEonofwealthisreinforcedbyhighratesofsavingfromwealthbasedreturnsratherthanlabourincome.

2.  thatahighelasEcityofsubsEtuEonbetweencapitalandlabourallowscapital,orproperty,togrowwithoutinducingafallintherateofreturntoproperty.

3.  thisproposiEonrunscountertotheequilibraEngtendenciesofneoclassicalmodels

MaclennanandMiao,2016 36



Pikety’sPredicEon•  thatthepaternsofthelast30yearswill

conEnueinthiscentury

•  thatrwillbegreaterthang,perhapsbyalargeramountthanatpresent(thisfactis“thecentralcontradicEonofcapitalism.”2014,p.571)

•  that‘ifr>g,thewealthofthecapitalistclasswillgrowfasterthantheincomesofworkers,leadingtoan“endlessinegalitarianspiral”(p.

572).

MaclennanandMiao,2016



TheHousingSystem&Pikety’sModelPikety’sworkhasimportantimplicaEonsfor

•  howhousingresearchersandeconomistsmightthinkaboutmajoreconomicpaternswithinhousingsystems.

•  howhousingmarkets,andrisinghousingassetvaluesinparEcular,willimpactr&g.

Housingmarketsandoutcomesareembeddedatthecoreofgrowthandinequality.




FactsaboutHousing&UrbanLand(1)

•  SuppliesofdevelopablelandremaininelasEcandhousingsupplyelasEciEesareuniversallylow.

•  SupplyinelasEcityisafundamentalratherthanpassingfeatureofhousingsystems

•  TheinteracEonofspaEallyconcentratedeconomicgrowth&housingsupplyinelasEcityhasakeyroletoplayinshihingwealthpaterns

39 MaclennanandMiao,2016



FactsaboutHousing&UrbanLand(2)

“ThecondiEonssetoutabovedeterminethathousingandlandvalueswillrisefasterthantheoverall(income)growthrate.

Aslongaslandandhousingareprivatelyownedanda‘patrimony’perspecEveoncapitalisemployed,thentheincomesandassetvaluesofpropertyownerswillriseaheadoftheoverallgrowthrate.”




FactsaboutHousing&UrbanLand(3)“Ricardo’sscarcitythesis‘meantthatcertainpricesmightrisetoveryhighlevelsovermanydecades.Thiscouldwellbeenoughtodestabilizeen9resocie9es.Thepricesystemplaysakeyroleincoordina9ngtheac9vi9esofmillionsofindividuals...Theproblemisthatthepricesystemknowsneitherlimitsnormorality.’

ItisEmetoputthispercepEonofhousingmarkets,andhousepricerises,atthecoreofresearchandpolicythinking.”




ImplicaEonsofPropertyOwnership(1)

Fact:thereisawiderdistribuEonofpropertyownershipthanacenturyago.

•  Greaterresistancetofurtherdensityincreases(NIMBYism)makeshousingsupplymoreinelasEc.

•  Ownersarethemajorityofvoterswithinmostdemocracies.





Therefore:taxpoliciesemergethatfavour

•  Homeownership,and

•  smallscalelandlordism,and

•  precludethetaxaEonof‘scarcityrents’,orunearnedcapitalgains.





Therefore:Governmentsalsotakeextensivemeasuresto•  preventhousepricesfromfalling,•  supporttheformaEonandperpetuaEonof

housingwealthgainsandtheinequaliEesthatflowfromthem.

Thereisthus“anexpandedrenEerclasswhoexpectanddefendunearnedwealthgains.”




HousingSystemImplicaEons(1)

•  “ThefundamentalnatureofhousingmarketsinmoderneconomiesisthattheypresentthepotenEalforgrowingconcentraEonofwealthandforrtoexceedgforlongperiods.

•  “Ahighrdrivenbyrisinghousepricesraisesupperandmiddleincomewealth.

•  “Itwillalsotendtoreducethedisposableincomesofpoorer,youngerandrenEnghouseholds.”




HousingSystemImplicaEons(2)

“OECDcountrieshavecometoorganisetheirhousingsystemsasmechanismsforencouragingrenEerreturnsandincreasingwealthandincomeinequaliEes.”

TheHousingSystem:Amechanismforincreasingwealth

andincomeinequality




ConclusionreHousingPolicy

•  anurgentneedforarenewedpoliEcaleconomyofhousingpolicies.

•  theconsequencesofhousepriceinflaEon&housingassetownershiparecentralpolicyissues.

•  HousepriceoutcomesandhousingwealthpaternsneedtobeatthecoreofmajordebatesaboutdistribuEonandgrowth.




AMECHANISMFORADEQUATEPRODUCTION,CHOICE,&AFFORDABILITY?

FutureHousingSystemChange

6



ADecent&HumaneHousingSystem

mustcoupleshelterwith•  security,warmth,peaceandindependence,•  livingspaceandspacetogrow,

•  nurturingandrefugeandsupport,•  independenceandprotecEonandrecreaEon,

•  accesstoworkandculture,•  goodrelaEonswithneighboursandstrangers.

PeterMarcuse,1987,232.

49



Howdohousingsystemschange?


1.  Changeisnotimpossible,butwillmeetwithstrongresistance.

2.  Thescale,funcEonandrelaEonshipbetweenthevarioustenuresisrelaEvelystable.

3.  TheinsEtuEonalandinstrumentalcontextinwhichhousingmarketsoperateanddevelopisalsorelaEvelystable.

4.  However,thefuncEonalimperaEvesofeconomicaccumulaEon&poliEcallegiEmizaEonneedtobeaddressedoccasionally.



HousingSystemChange

Changewhat?•  DemandActors:households&theirhousing

preferences

•  SupplyActors:producersofhousing&housingservices(buildingfirms,developers,commercial&sociallandlords,andintermediaries,e.g.,realestateagentsandpropertyconsultants)

•  InsEtuEons:therules,normsandregulaEonsunderwhichasystemfuncEons

51 HarryvanderHeijden,2013



Conclusionfrom

“WebelievethatCapitalinthe21stCenturyprovidesnewinsightsonchangingwealthpaternsandthoughtframeworkstoexaminethem.

“ItprovidesastrongsetoffoundaEonsonwhichtothinkthroughhousingrelatedissues.

“ItisEmetodebatehousingcapitalinthecenturyahead.”

àWhatdoes“debatehousingcapital”mean?ß



“TheGermanhousingsystem:fundamentallyresilient?”

Kofner,S.(2014)JournalofHousingandtheBuiltEnvironment,29(2),255-275.

Germany’sHousingSystem:Notamechanismforincreasingwealth&incomeinequality?



Germanhouseprices:10%decreaseinrealtermsover30years.UK+230%.



GermanHousingPolicy



WhatistheproblemwiththehousingsysteminAnglo-AmericannaEons?•  Income&wealthinequality•  DiscriminaEon•  Policyfocusonhouseownership:Thelackof

tenureneutralityinpolicy&culture– HousingsubsidiesinCanada:$6Bownership;$2B

socialrental;$0.5Bprivaterental

•  RegulaEonofrentalhousingproviders•  __________________•  __________________



Foraninclusivehousingsystem

•  Decreasehouseownershipsubsidies•  Taxrealestateflippingandunearnedcapital

gains(betermentlevies)•  Mandatoryinclusionaryhousing&zoning•  Subsidizeprivate&socialrentedhousing

construcEonandrehabilitaEon•  ___________________•  ___________________



ReferencesBourne,L.S.(1981)TheGeographyofHousing,London:Arnold.Forrest,R.(2008)“GlobalizaEonandthehousingassetrich:Geographies,

demographiesandpolicyconvoys,”GlobalSocialPolicy,8(2),167–187.

Hulchanski,J.D.(2010)TheThreeCi9eswithinToronto:Incomepolariza9onamongToronto'sneighbourhoods,1970-2005,UniversityofToronto,CiEesCentre.

Maclennan,D.andJ.Miao(2016)“Capital,Housing,andInequalityinthe21stCentury.”forthcoming.

Marcuse,Peter(1987)“TheOtherSideofHousing:OppressionandLiberaEon,”inB.Turner,J.KemenyandL.J.Lundqvist,eds.,BetweenStateandMarket:HousinginthePost-IndustrialEra,Goteborg:Almqvist,pp.232-266.

Murie,A.(2012)“Housinginthewelfarestate:ParEEoningplacesandpeople,”LocalEconomy,27(5-6),480-485.

Murie,A.(2012)“TheNextBlueprintforHousingPolicyinEngland,”HousingStudies,27(7),1031-1047.

vanderHeijden,H.(2013)WestEuropeanhousingsystemsinacompara9veperspec9ve,Amsterdam:IOSPress.



the housing system - shaping futures · boelhouwer & van der heijden, 1992 it is important to...

Documents