RESIDENTIAL MOBILITY AND NEIGHBORHOOD QUALITY*

ABSTRACT. This paper presents evidence on the factors causing residential mobility within inner-city neighborhoods. A theoretical model is presented which posits that intraurban mobility is a response to housing consumption disequilibrium. Our data and methodology permitted more accurate measurement of disequilibrium than in previous studies, including the disequilibrium arising from neighborhood change. The major conclusion we draw from our results is that households' perceptions of the level of neighborhood quality and its change influence the mobility decisions of both renters and homeowners residing within central cities. Also, in comparison to other measured factors, neighborhood variables were found to be strong mobility predictors regardless of housing tenure. Our results imply that neighborhood improvement policies may succeed in stabilizing inner-city neighborhoods.     

HOMEOWNERSHIP IN AN UNCERTAIN WORLD WITH SUBSTANTIAL TRANSACTION COSTS*

ABSTRACT This paper presents a dynamic model of residential real estate tenure decisions that takes into account the substantial transaction costs and the uncertain time paths of rents and prices. By temporarily postponing decisions, buyers and sellers obtain additional information and may avoid transactions that are costly to reverse. One implication is that the combination of high transaction costs and substantial uncertainty can create a large wedge between a household's reservation prices for buying and selling a home, which can explain why households do not switch back and forth between owning and renting as home prices fluctuate.     

Are the home values and property tax burdens of permanent homeowners affected by growth in housing rentals and second homes: Evidence based on big data from Florida

Homeowners who make their homes their primary residence have resisted the entry of rentals into their neighborhoods and cities. Possible reasons underlying this resistance are that rentals reduce the property values, increase the property tax burdens, and raise the price of public services for these homeowners. We relate the market values of single-family homes occupied by permanent homeowners, the effective property tax rate of these homeowners, and the tax price they pay for public services to shifts in their city's housing units toward a variety of different types of rentals and second homes. Our analysis is based on large panels of Florida homes containing hundreds of thousands and millions of observations. Our results show that increases in the share of a city's housing units used as rentals or second homes reduce the home values, increase the property tax burdens, and raise the public services prices of homeowners who permanently reside in single-family homes. Impacts vary in magnitude among single-family, condominium, and mobile homes used as rentals and second homes. Estimated impacts are the strongest for share increases in single-family rentals and second homes.     

New Evidence of the Effect of Transaction Costs on Residential Mobility*

Abstract. Transaction costs have attracted considerable attention in the theoretical literature on residential mobility. Transaction costs are thought to cause suboptimal consumption of housing but may also negatively affect labor market outcomes. In the current paper, we demonstrate empirically for the Netherlands that transaction costs have a strong negative effect on the owners' probability of moving. Under a range of different specifications, it appears that a 1 percent‐point increase in the value of transaction costs—as a percentage of the value of the residence—decreases residential mobility rates by (at least) 8 percent. The estimates imply that ownership to ownership mobility rates would be substantially higher in the absence of the current 6 percent ad valorem buyer transaction tax. Our estimates are consistent with the observation that in the Netherlands ad valorem transaction costs mainly consist of buyer transaction costs.     

Immigrants and homelessness—at risk in Canada's outer suburbs

Homelessness is a risk for growing numbers of immigrants. Largely as a result of low incomes, newcomers are more likely than the Canadian-born to spend over 50 percent of total household income on housing costs. Many newcomers suffer 'hidden homelessness'. They do not use shelters and other services, but share accommodation, couch-surf and rely on their social contacts for temporary and precarious housing. The adverse impact of low incomes on the housing experiences of Canadian newcomers is exacerbated in the outer suburbs of metropolitan areas where the supply of affordable housing is limited. This study explores the social backgrounds and housing experiences of immigrant households that are vulnerable to homelessness in outer suburbs through analysis of special tabulations from the 2001 census for York Region and interviews with representatives from local community organisations serving immigrant and low-income populations. The initial findings confirm that a high proportion of newcomers in York Region are at-risk of homelessness during the first 10 years of residence in Canada. Although renters are more vulnerable than homeowners, a substantial percentage of newcomers who are homeowners pay more than 30 percent of their total income on housing costs. The shortage of affordable rental housing in the outer suburbs exacerbates the impacts of low incomes, immigration status, household size and ethnoracial identities on immigrants' housing.     

ANALYSIS OF A DYNAMIC RESIDENTIAL LOCATION CHOICE MODEL WITH TRANSACTION COSTS*

ABSTRACT. This paper incorporates transaction costs in a residential location choice model. An individual's choice is assumed to be an outcome of a two-stage process: a decision to change, or to undertake a transaction and, conditional on a change occurring, a choice of a new alternative. The dynamic choice model is aggregated to yield a Markovian model of residential location patterns. It is shown that recent contributions to dynamical urban modeling correspond to special cases of the deterministic version of this model. The Markovian model is used in a theoretical analysis of the influence of transaction costs on the properties of the stationary state. The effects of residential mobility rates and of interdependencies among individuals, caused by supply-side and density-related interactions, are also analyzed. It is shown how these dynamical factors modify the stationary state, thereby demonstrating the type of errors which may occur with static models that omit them.     

Housing in the face of crisis: The influence of Israel's 2011 protest on housing policy

Do social protests affect government housing-related decisions? If so, in what way? To answer this question this study examines the influence of Israel's 2011 social protest on the government's housing policy, using an empirical cumulative-aggregative analysis of housing-related decisions over the past two decades. The empirical analysis is based on two generic classifications of government interventions commonly used in housing literature: first, decisions aimed at increasing the housing stock (supply-side), as opposed to policies aimed at augmenting consumers' financial capacity to obtain adequate housing (demand-side); and second, decisions that encourage homeownership as opposed to those that promote rental housing. The research findings show that the 2011 social protest definitely affected Israel's housing policy, because it prompted the government to engage in housing. However, the interventions introduced focused largely on increasing the inventory of housing units (supply-side) for homeownership and benefited mainly members of the middle class who qualify for mortgages and investors. Thus, despite the increase in government involvement in the post-protest period, Israel's housing policy has remained neoliberal, though in an advanced form of neoliberalism that combines market-oriented policies with centralized tendencies, which we call “centralized neoliberalism.” The study discusses the findings and their implications for various population groups. Given the current global affordable-housing crisis, the findings are relevant to many countries whose existing neoliberal housing policy is failing to address housing-market problems and challenges.     

THE PUZZLE OF JOB SEARCH AND HOUSING TENURE: A RECONCILIATION OF THEORY AND EMPIRICAL EVIDENCE

Oswald's thesis posits that homeowners should have longer unemployment spells than renters due to restricted mobility, but repeatedly the reverse is found. I contribute to solve this puzzle analyzing both job search intensity and unemployment duration. First, I show that homeowner's mobility constraints have a negative impact on search. Theoretically, it is shown in a search model with moving costs. Using U.K. Labour Force Survey (LFS) data, it is confirmed when considering outright owners, while leveraged owners have the highest search. Second, I find evidence that homeowners select search methods associated with shorter unemployment spells, suggesting that they search more efficiently.     

Rationality test in the housing market: Project-level evidence from China

We test whether investors rationally react to rent news when pricing houses. Previous literature on house pricing uses aggregated housing price and rent data to estimate the rent news. We analytically demonstrate that using aggregated data biases the rationality test because it forces researchers to estimate the rent news using the cross-project average dynamic relationship among the housing return, rent growth, and macroeconomic dynamics and, hence, misses the heterogeneity in the dynamic relationship. Our empirical tests using proprietary project-level housing data from China's megacities find that the bias from missing the heterogeneity is economically substantial.     

Quenching the Thirst: The Cost of Water in Fragile Environments

Public policy has often addressed the problems of water supply and sanitation from the supply side to the neglect of demand side aspects in developing countries like India. This policy has not only rendered a large number of projects financially unviable but has also resulted in inadequate coverage of aspects such as population and ecological unsustainability. This article, based on household level information from six villages in a water scarce region of India (Rajasthan state), examines inter- and intra-village variations in water use and the costs, direct and indirect, involved in obtaining water. It also estimates households' willingness and ability to pay for water, using the contingent valuation method (CVM). Using qualitative as well as quantitative methods, it is argued that it is the failure of government policy and of institutions which has led to severe water shortages in harsh environments rather than supply or financial bottlenecks per se. While the estimates of price elasticity of water use indicate the feasibility of water pricing in the rural areas, the willingness to pay estimates question the general assumption that rural households are willing to pay 5 per cent of their income/expenditure for water. Various economic and extra economic factors such as household income, low opportunity costs of women and children, and attitudes towards female labour and public goods are vital in influencing the households' willingness to pay for water.     

Evolving enclave urbanism in China and its socio-spatial implications: the case of Guangzhou

Enclave urbanism has deep historical roots in China, from the earliest forms of enclave residence, i.e. the walled city and courtyard housing, to the contemporary intricate mosaic of enclaves comprising danwei (work unit) compounds, gated commodity housing estates and migrant enclaves. Yet the evolution of enclave urbanism is not simply a convergence with Western urban forms, nor is it a process of historical succession or cultural inertia. The story of enclave urbanism is far more complicated. Exploring China's evolving urban enclaves and their socio-economic implications would add much richness and diversity to the international debates on enclave urbanism. The first half of the paper discusses the evolving processes and dynamics of China's enclave urbanism, with special reference to Guangzhou. The complex dynamics of China's enclave urbanism are evolving around various socio-economic, cultural, institutional and political forces, within which institutional arrangements for urban spatial organisation and social control are playing a fundamental role. To present a fuller picture of the plural socio-spatial connotations of China's enclave urbanism, the second half of the paper unpacks the heterogeneity of urban fabrics and examines how different social groups perceive and represent the social aspects of their lives. Featuring a high degree of heterogeneity within and between different types of neighbourhoods, enclave urbanism in China has entailed a complex relationship between urban form and social fabric. In addition, for various social groups, urban enclave living is endowed with very different social meanings. In gated commodity housing estates, enclave living is an expression of a safe, high-quality and privileged lifestyle. In urban villages, it is a compromise choice involving makeshift urban living resulting from suppressed rights to the city. And, in danwei compounds, it is a lingering lifestyle to which people used to be collectively assigned with no exercise of their own choice and from which they are now emotionally estranged.     

ECONOMIC IMPACTS OF CULTURAL DIVERSITY IN THE NETHERLANDS: PRODUCTIVITY,UTILITY, AND SORTING*

ABSTRACT This paper identifies the impact of cultural diversity on local economies, by explaining spatial disparities in wages and housing prices across Dutch cities using unique individual panel data of homeowners during the period 1999 and 2008. We distinguish between the effects of spatial sorting based on individual heterogeneity, interactions‐based productivity effects, and consumer amenities while controlling for interactions between the labor and housing market. In line with previous literature, we find a positive effect of cultural diversity on average housing prices. After controlling for spatial sorting, the effect of cultural diversity on housing prices is negative. The negative impact of cultural diversity on local housing markets is likely driven by a causal effect between the presence of immigrants and neighborhood quality that outweighs a positive effect of immigrant‐induced diversity in consumption goods.     

LOCATIONAL SIGNALING AND AGGLOMERATION

Agglomeration can be caused by asymmetric information and a locational signaling effect: The location choice of workers signals their productivity to potential employers. The cost of a signal is the cost of housing at that location. When workers' marginal willingness to pay for housing is negatively correlated with their productivity, only the core‐periphery (partially stratified) equilibria are stable. When workers' marginal willingness to pay for housing and their productivity are positively correlated, there is no core‐periphery equilibrium. The urban wage premium is explained when there is a core‐periphery equilibrium. Furthermore, location can at best be an approximate rather than a precise sieve for high‐skill workers.     

SPATIAL MOBILITY AND COMMUTING: THE CASE OF TWO‐EARNER HOUSEHOLDS*

ABSTRACT We examine the effects of the spatial configuration of workers' residence and workplace location on intraregional residential and job moving decisions of workers belonging to two‐earner households. We hypothesize that two‐earner households' residential mobility depends positively on the commuting distance of both spouses, but negatively on the distance between workplaces. Further, we hypothesize that workers' job mobility depends positively on the worker's commuting distance, negatively on the spouse's commuting distance, and positively on the distance between workplaces. Using data for Denmark, it appears that these hypotheses hold, and that the effects of the spatial configuration are rather large.     

Preferences for Housing, Jobs, and Commuting: A Mixed Logit Analysis

This paper reports stated preferences of Dutch workers for combinations of housing, employment, and commuting. The analysis uses standard logit models as well as mixed logit models. Estimation results offer insights into the relative importance of various aspects of housing, employment, and commuting. Households dislike commuting and the value of commuting time implied by the model is high in comparison to the wage rate. Nevertheless, preferences for some housing attributes are strong enough to make substantially longer commuting acceptable to most workers. Of special interest is the strong preference for living in small-or medium-size cities, especially among two income households. Using a mixed logit model instead of a standard logit model results in a substantial improvement of the loglikelihood, reflecting the importance of heterogeneity among respondents. If no individual characteristics are incorporated into the model, the mixed logit implies substantially lower average monetary evaluations of most attributes. These differences are much smaller if some individual characteristics are incorporated into the model.     

Housing Choice in a Regulated Market: A Nested Multinomial Logit Analysis

The paper integrates several important elements of the institutionalized and regulated nature of the housing market and analyzes the relationship between household type and housing choice in Vienna within a nested multinomial logit framework. In particular, the concept of household specific choice sets is used to account for institutional, informational and income-based constraints of the choice process. Government subsidies (such as housing and rent allowances, non-interest-bearing state loans) are explicitly taken into account in the definition of variables. Housing choice is considered in three stages: the choice of a dwelling unit given dwelling type and residential zone, the choice of a dwelling type given residential zone, and the marginal choice of a residential zone. The coefficients are derived by means of a sequential ML-procedure. The empirical results clearly indicate that demographic variables have significant impacts on housing choice behavior. Income as a single explanatory variable as well as its interacting with size measures and the quality of the house are found to be important criteria for dwelling unit choice, as housing cost variables for dwelling type choice behavior. The dwelling unit and dwelling type choice submodels fit reasonably well, whereas the residential zone model is less successful.     

Producer Services,Transaction Activities,and Cities: Rethinking Occupational Categories in Economic Geography

Applying insights from 'new institutional economics' to classify economic activities or occupations avoids some problems for which conventional classifications of services and particularly producer services have long been criticized. In institutionalist thinking the mixture of organizational forms such as market, hierarchy or network in an economy is mainly determined by transaction costs, which can in turn be correlated to specific 'transaction activities'. Typical transaction activities can be identified in markets and in other institutional arrangements, allowing the classification of real economic activities, occupations or firms as transactional or not. Many other commonly applied labels like informational related activities appear comparatively imprecise. This categorization and differentiation sheds new light on discussions about spatial development, from the world city debate to claims about the presumed role of high-tech occupations in metropolitan areas. It is argued that transactional occupations, especially those requiring higher qualifications, can be expected to be highly concentrated in larger agglomerations. In contrast, many non-transactional occupations though requiring high qualifications and usually also regarded as basic for metropolitan economies, like parts of R&D, are not necessarily concentrated there.     

A SPATIAL AND TEMPORAL AUTOREGRESSIVE LOCAL ESTIMATION FOR THE PARIS HOUSING MARKET

ABSTRACT This original study examines the potential of a spatiotemporal autoregressive Local (LSTAR) approach in modeling transaction prices for the housing market in inner Paris. We use a data set from the Paris Region notary office (Chambre des notaires d’Île‐de‐France) which consists of approximately 250,000 transactions units between the first quarter of 1990 and the end of 2005. We use the exact X–Y coordinates and transaction date to spatially and temporally sort each transaction. We first choose to use the STAR approach proposed by Pace et al., 1998 . This method incorporates a spatiotemporal filtering process into the conventional hedonic function and attempts to correct for spatial and temporal correlative effects. We find significant estimates of spatial dependence effects. Moreover, using an original methodology, we find evidence of a strong presence of both spatial and temporal heterogeneity in the model. It suggests that spatial and temporal drifts in households socio‐economic profiles and local housing market structure effects are certainly major determinants of the price level for the Paris Housing Market.     

Geographies of adult multigenerational family households in metropolitan Sydney

This paper investigates spatial trends of multigenerational adult families in metropolitan Sydney. Australia's immigrant gateway city, Sydney has high housing costs and infrastructure pressures, and planning policies support higher residential densities. In this context, the accommodation of persons living in multigenerational families is examined, by major region of origin, their geographies in Sydney, and by housing costs and constraints. Results highlight that cultural origins were influential in multigenerational household formations, and such formation is higher in areas of first and second ethnic community formation areas. Multigenerational living is also more common in middle ring and outer areas of cheaper housing. Implications are drawn for more nuanced housing policies in Sydney and comparable cities, given that detached and semi‐detached houses were favoured by these households, whereas two‐fifths of new housing constructed in Sydney in 2011 consists of two or less bedroom apartments.     

Norms,coercion and contracting in the struggle against ‘harmful’ tax competition

The world's richest and most powerful countries have become increasingly concerned about revenue lost to tax havens, and fear that tax competition might spark a fiscal ‘race to the bottom’, yet they have failed to pressure much smaller and weaker tax haven states into reform. This article argues that the OECD-sponsored campaign against ‘harmful’ tax competition has been unsuccessful because regulative norms have severely constrained the means legitimately able to be employed. Early decisions on how the campaign was designed subsequently brought norms into play which have not only ruled out the use of coercion, but also the use of side payments, despite the massive potential benefits available to both sides from a deal between tax havens and OECD states. The failure to strike a deal cannot be explained by high transaction costs nor by corporate lobbying in defence of tax shelters. Regulative norms can thus affect economic bargaining in the international arena by preventing mutually advantageous exchanges that are nevertheless regarded as inappropriate.