Post on 16-Sep-2020
TheHousingSystemAmechanismforincreasingwealth
andincomeinequality.Anythingelse?
DavidHulchanskiUniversityofToronto
12June2016
J David Hulchanski, University of Toronto
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1. DefiniEon
2. Criteriaforassessing
3. Macrocontext
4. Roleofhousingassets
5. Current:Mechanismforincreasingwealthandincomeinequality
6. Future:MechanismforadequateproducEon,choice&affordability
TheHOUSINGSYSTEM
J David Hulchanski, University of Toronto
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DEFINITIONThe“HousingSystem”
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Bourne,1981
“atypicallyvaguebutconvenientshorthandexpressiontoencompassthefullrangeofinter-relaEonshipsbetweenalloftheactors(individualandcorporate),housingunitsandinsEtuEonsinvolvedintheproducEon,consumpEonandregulaEonofhousing.”
“Itisthusamuchbroadertermthanhousingmarketorsector.”
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Priemus,1983
• thecomplexofactors,includingtheirmanyrelaEonshipsandinteracEons,thatareinvolvedinhousing.
• thecontextisimportantinthedevelopmentofahousingsystem,parEcularlytheeconomic,demographic,poliEcalandspaEalfactorswhichinfluencethesystemandarethemselvesinfluencedbythehousingsysteminturn.
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Boelhouwer&vanderHeijden,1992ItisimportanttomakeadisEncEonbetween
1. theorganisaEonofthehousingmarket(theinsEtuEonalstructure),
2. theactors(supply&demand),and
3. housingpolicy.
Thesefactorsinteractwithexogenicfactors(thecontext)todeterminetheobjecEvecharacterisEcsofthehousingsystem.
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HarryvanderHeijden,2013
ThehousingsystemreferstotheinteracEonbetweenactors&insEtuEonsinEme&space.
Itispartofawidersocietalsystem;thusitsdifferentpartsareinfluencedbybroader,externalfactorssuchaseconomic,socio-culturalanddemographictrends.
Housingsystemoutcomes,inturn,haveanimpactonthebroadersocietalsystem.
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HarryvanderHeijden,2013ThemainconsEtuentsofahousingsystem:
• DemandActors:households&theirhousingpreferences
• SupplyActors:producersofhousing&housingservices(buildingfirms,developers,commercial&sociallandlords,andintermediaries,e.g.,realestateagentsandpropertyconsultants)
• InsEtuEons:therules,normsandregulaEonsunderwhichasystemfuncEons
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Whatshapeshousingsystems?
DemandSupply&
InsEtuEonsmeetinthehousingmarket
&generatetheoutcomesofthe
housingsystem9 HarryvanderHeijden,2013
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Economic&DemographicPressuresplaythemajorroleinshapinghousingsystems
10 HarryvanderHeijden,2013,p.183
J David Hulchanski, University of Toronto
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Whatabouttheroleofgovernmentinshapinghousingsystems
11 HarryvanderHeijden,2013,p.187
Housingpoliciesofbothright&lehofcentregovernmentsdidnotcorrelatestronglywiththeirideologicalstance.
Ratheritwasthe:– specifichousingmarketsituaEon– associatedfactorsofhousingtradiEon– insEtuEonalstructureofthehousingmarket
GovernmentswilltrytoachievetheirpoliEcalobjecEveswithinthiscontext.
J David Hulchanski, University of Toronto
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Whataboutchange,a'systemshih'inthehousingsystem?
12 HarryvanderHeijden,2013,p.187
1. Changeisnotimpossible,butwillmeetwithstrongresistance.
2. Thescale,funcEonandrelaEonshipbetweenthevarioustenuresisrelaEvelystable.
3. TheinsEtuEonalandinstrumentalcontextinwhichhousingmarketsoperateanddevelopisalsorelaEvelystable.
4. TherearefuncEonalimperaEvesofeconomicaccumulaEonandpoliEcallegiEmizaEon.
J David Hulchanski, University of Toronto
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PRODUCTION,CHOICE,AFFORDABILITY
Criteriaforassessinghousingsystems.WhatisanInclusiveHousingSystem?
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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
J David Hulchanski, University of Toronto
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HousingSystemOUTPUTS
1. Housingstock(size&composiEon)
2. ProducEonlevel(new&rehab)
3. DistribuEontohouseholds
4. Cost(expense-to-incomeraEo)
15 Boelhouwer&VanderHeijden,1992
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DifferentHousingSystemshavedifferentmixofHousingTenure
HOUSINGTENURE:ThetermsandcondiEons(rights&responsibiliEes),legalandcultural,bywhichhousing
isowned,occupied,andmaintained.
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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
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MACROCONTEXT:INEQUALITY,TAXREVENUES
TheHousingSystem
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DividedSocieEes:InequalityisaChoice
“Iseeusenteringaworlddividednotjustbetweenthehavesandhave-nots,butalsobetweenthosecountriesthatdonothingaboutit,andthosethatdo.
“SomecountrieswillbesuccessfulincreaEngsharedprosperity—theonlykindofprosperitythatIbelieveistrulysustainable.
“Otherswillletinequalityrunamok.”
JosephSEglitz,2013
J David Hulchanski, University of Toronto
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HOUSINGASSETSTheHousingSystem
RayForrest,2008
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HousingAssets:PolicyQuesEons
• Isthereadifferencebetweenpeoplewithandwithouthousingassets?
• Havehousingassetsbecomemoreflexibleand‘liquifiable’duetopublicpolicy?
• DoeslocaEonmater(country,region,city,neighbourhood)intermsofhousingassets?
• IshousingplayingalargerpotenEalroleinsocialoutcomesthaninthepast?
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RayForrest,2008
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LifeCourseImplicaEonsofHousingAssets
“whoyouare,whereyouare,and
whenyouachievehomeownership
arecriEcaldeterminantsof
futuretrajectories.”RayForrest,2008
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TransformaEvePotenEalofHousingAssets“theposiEveandnegaEveimpactsofhousingassetsinrelaEonto• socialstraEficaEonandsocialinequality,• thedistribuEonofwealthanditsdeployment
withinandbetweenhouseholdsandgeneraEons,
• themacro-economicconsequencesofremortgagingandequityrelease,and
• theunevenspaEalimpactoftheseprocesseswithinciEes,regionsandglobally.”RayForrest,2008
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TransformaEvePotenEalofHousingAssets
“BytransformaEvepotenEalIamreferringto…and
• theunevenspaCalimpactoftheseprocesseswithinciEes,regionsandglobally.
Torontoexampleàà
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J David Hulchanski, University of Toronto
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Socio-SpaEalPOLARIZATION
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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.
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J David Hulchanski, University of Toronto
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LifeCourseImplicaEonsofHousingAssets
“Thedivisionsbetweenthehousingassetrichandthehousingassetpoor
canbeconceivedofatdifferentspaEalscalestoevoke
amulElayeredandintertwinedgeographyofadvantageanddisadvantage.”
RayForrest,200834
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AMECHANISMFORINCREASINGWEALTH&INCOMEINEQUALITY
TheCurrentHousingSystem
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Pikety’sTheoryThecoreofPikety’stheoryormodelisthat
1. anunequaldistribuEonofwealthisreinforcedbyhighratesofsavingfromwealthbasedreturnsratherthanlabourincome.
2. thatahighelasEcityofsubsEtuEonbetweencapitalandlabourallowscapital,orproperty,togrowwithoutinducingafallintherateofreturntoproperty.
3. thisproposiEonrunscountertotheequilibraEngtendenciesofneoclassicalmodels
MaclennanandMiao,2016 36
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Pikety’sPredicEon• thatthepaternsofthelast30yearswill
conEnueinthiscentury
• thatrwillbegreaterthang,perhapsbyalargeramountthanatpresent(thisfactis“thecentralcontradicEonofcapitalism.”2014,p.571)
• that‘ifr>g,thewealthofthecapitalistclasswillgrowfasterthantheincomesofworkers,leadingtoan“endlessinegalitarianspiral”(p.
572).
MaclennanandMiao,2016
J David Hulchanski, University of Toronto
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TheHousingSystem&Pikety’sModelPikety’sworkhasimportantimplicaEonsfor
• howhousingresearchersandeconomistsmightthinkaboutmajoreconomicpaternswithinhousingsystems.
• howhousingmarkets,andrisinghousingassetvaluesinparEcular,willimpactr&g.
Housingmarketsandoutcomesareembeddedatthecoreofgrowthandinequality.
MaclennanandMiao,2016 38
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FactsaboutHousing&UrbanLand(1)
• SuppliesofdevelopablelandremaininelasEcandhousingsupplyelasEciEesareuniversallylow.
• SupplyinelasEcityisafundamentalratherthanpassingfeatureofhousingsystems
• TheinteracEonofspaEallyconcentratedeconomicgrowth&housingsupplyinelasEcityhasakeyroletoplayinshihingwealthpaterns
39 MaclennanandMiao,2016
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FactsaboutHousing&UrbanLand(2)
“ThecondiEonssetoutabovedeterminethathousingandlandvalueswillrisefasterthantheoverall(income)growthrate.
Aslongaslandandhousingareprivatelyownedanda‘patrimony’perspecEveoncapitalisemployed,thentheincomesandassetvaluesofpropertyownerswillriseaheadoftheoverallgrowthrate.”
40 MaclennanandMiao,2016
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FactsaboutHousing&UrbanLand(3)“Ricardo’sscarcitythesis‘meantthatcertainpricesmightrisetoveryhighlevelsovermanydecades.Thiscouldwellbeenoughtodestabilizeen9resocie9es.Thepricesystemplaysakeyroleincoordina9ngtheac9vi9esofmillionsofindividuals...Theproblemisthatthepricesystemknowsneitherlimitsnormorality.’
ItisEmetoputthispercepEonofhousingmarkets,andhousepricerises,atthecoreofresearchandpolicythinking.”
MaclennanandMiao,2016 41
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ImplicaEonsofPropertyOwnership(1)
Fact:thereisawiderdistribuEonofpropertyownershipthanacenturyago.
• Greaterresistancetofurtherdensityincreases(NIMBYism)makeshousingsupplymoreinelasEc.
• Ownersarethemajorityofvoterswithinmostdemocracies.
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ImplicaEonsofPropertyOwnership(2)
Therefore:taxpoliciesemergethatfavour
• Homeownership,and
• smallscalelandlordism,and
• precludethetaxaEonof‘scarcityrents’,orunearnedcapitalgains.
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ImplicaEonsofPropertyOwnership(3)
Therefore:Governmentsalsotakeextensivemeasuresto• preventhousepricesfromfalling,• supporttheformaEonandperpetuaEonof
housingwealthgainsandtheinequaliEesthatflowfromthem.
Thereisthus“anexpandedrenEerclasswhoexpectanddefendunearnedwealthgains.”
44 MaclennanandMiao,2016
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HousingSystemImplicaEons(1)
• “ThefundamentalnatureofhousingmarketsinmoderneconomiesisthattheypresentthepotenEalforgrowingconcentraEonofwealthandforrtoexceedgforlongperiods.
• “Ahighrdrivenbyrisinghousepricesraisesupperandmiddleincomewealth.
• “Itwillalsotendtoreducethedisposableincomesofpoorer,youngerandrenEnghouseholds.”
MaclennanandMiao,2016 45
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HousingSystemImplicaEons(2)
“OECDcountrieshavecometoorganisetheirhousingsystemsasmechanismsforencouragingrenEerreturnsandincreasingwealthandincomeinequaliEes.”
TheHousingSystem:Amechanismforincreasingwealth
andincomeinequality
46 MaclennanandMiao,2016
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ConclusionreHousingPolicy
• anurgentneedforarenewedpoliEcaleconomyofhousingpolicies.
• theconsequencesofhousepriceinflaEon&housingassetownershiparecentralpolicyissues.
• HousepriceoutcomesandhousingwealthpaternsneedtobeatthecoreofmajordebatesaboutdistribuEonandgrowth.
47 MaclennanandMiao,2016
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AMECHANISMFORADEQUATEPRODUCTION,CHOICE,&AFFORDABILITY?
FutureHousingSystemChange
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ADecent&HumaneHousingSystem
mustcoupleshelterwith• security,warmth,peaceandindependence,• livingspaceandspacetogrow,
• nurturingandrefugeandsupport,• independenceandprotecEonandrecreaEon,
• accesstoworkandculture,• goodrelaEonswithneighboursandstrangers.
PeterMarcuse,1987,232.
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Howdohousingsystemschange?
50 HarryvanderHeijden,2013,p.187
1. Changeisnotimpossible,butwillmeetwithstrongresistance.
2. Thescale,funcEonandrelaEonshipbetweenthevarioustenuresisrelaEvelystable.
3. TheinsEtuEonalandinstrumentalcontextinwhichhousingmarketsoperateanddevelopisalsorelaEvelystable.
4. However,thefuncEonalimperaEvesofeconomicaccumulaEon&poliEcallegiEmizaEonneedtobeaddressedoccasionally.
J David Hulchanski, University of Toronto
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HousingSystemChange
Changewhat?• DemandActors:households&theirhousing
preferences
• SupplyActors:producersofhousing&housingservices(buildingfirms,developers,commercial&sociallandlords,andintermediaries,e.g.,realestateagentsandpropertyconsultants)
• InsEtuEons:therules,normsandregulaEonsunderwhichasystemfuncEons
51 HarryvanderHeijden,2013
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Conclusionfrom
“WebelievethatCapitalinthe21stCenturyprovidesnewinsightsonchangingwealthpaternsandthoughtframeworkstoexaminethem.
“ItprovidesastrongsetoffoundaEonsonwhichtothinkthroughhousingrelatedissues.
“ItisEmetodebatehousingcapitalinthecenturyahead.”
àWhatdoes“debatehousingcapital”mean?ß
J David Hulchanski, University of Toronto
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“TheGermanhousingsystem:fundamentallyresilient?”
Kofner,S.(2014)JournalofHousingandtheBuiltEnvironment,29(2),255-275.
Germany’sHousingSystem:Notamechanismforincreasingwealth&incomeinequality?
J David Hulchanski, University of Toronto
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Germanhouseprices:10%decreaseinrealtermsover30years.UK+230%.
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GermanHousingPolicy
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WhatistheproblemwiththehousingsysteminAnglo-AmericannaEons?• Income&wealthinequality• DiscriminaEon• Policyfocusonhouseownership:Thelackof
tenureneutralityinpolicy&culture– HousingsubsidiesinCanada:$6Bownership;$2B
socialrental;$0.5Bprivaterental
• RegulaEonofrentalhousingproviders• __________________• __________________
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Foraninclusivehousingsystem
• Decreasehouseownershipsubsidies• Taxrealestateflippingandunearnedcapital
gains(betermentlevies)• Mandatoryinclusionaryhousing&zoning• Subsidizeprivate&socialrentedhousing
construcEonandrehabilitaEon• ___________________• ___________________
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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.
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