GGR 357 H1F Geography of Housing and Housing Policy

GGR 357 H1F Geography of Housing and Housing Policy Session 6 Neighbourhood transitions June 4, 2008 DR. AMANDA HELDERMAN

Session 6:Neighbourhoodtransitions • Announcements • Midterm answers • Neighbourhood transitions • Factors of neighbourhood changes • Theoretical models that explain transitions in an area • Research methods • Gentrification, branding, marketing • Roles of culture versus that of the economy

Announcements • Paper assignment due June 20, 2008: http://individual.utoronto.ca/helderman • Don’t wait too long with contacting me if you have any difficulties! • Please consult previous lecture notes/ slides before contacting me

Announcements Final exam: • Similar format as midterm • 85% about sessions after the midterm • 15% about sessions before midterm • Final exam on June 23, 2008, 5-7 pm • Wilson Hall (New College) • Room 1016

Announcements Topics to tackle before the final exam: • Neighbourhood transitions - today • Access to housing: housing allocation – Monday (9th) • Housing affordability and quality – Wednesday (11th) • Meanings of home and attitudes toward homeownership – Monday (16th) • Reflection on the role of the government and other actors in the public domain – Wednesday (18th) • Last session: a review if schedule allows it

APUS class representative (part 1) The association of Part-Time Undergraduate Students (APUS) is accepting those summer students who are taking 1.0 credits or less as our members. We encourage you to participate in APUS by becoming a representative for your class. The following are some of the issues that APUS is active in by addressing:…

APUS class representative (part 2) • tuition freeze, • university/government financial aid for part-time students, • part-time student on-campus housing, • family care, and • summer/evening course selection. As a class representative, you would receive periodic information updates from APUS and keep your classmates informed about upcoming summer social events, meetings, important issues and campaigns. You would also bring back to APUS feedback you receive from your classmates on issues and concerns. Contact: 416-978-3993 or info.apus@utoronto.ca

Exam answers - Question 1 a) Explain why housing is so attractive to individuals (mention at least 3 reasons for 1 point each, up to 3 points). Homeowners build up equity from their homes, they enjoy on average a better housing quality, they are free to customize their home, they are independent and have full control over their housing situation, homeownership represents continuity and stability, homeownership to many represents status, and finally it also represents emotional value.

Exam answers- Question 1 b) Give 3 definitions of housing (6 points). Physical product/ facility (bricks and mortar), commodity/ economic/ exchange good,investment good/ asset, sector of the economy, social/ collective good, building block of neighbourhoods (2 points each up to 6 points)

Exam answers- Question 1 c) What was Bourne’s definition of housing? Include an example to illustrate what that means. (4 points) Housing can be described as a bundle of services (2 points). Services that housing delivers: shelter, wealth, shelter from inflation (capital), accessibility to services, accessibility to work, accessibility to neighbourhood, social status, right to privacy (add 2 points for any of the examples including an explanation of the definition).

Exam answers- Question 1 d) Why did he land on this definition(2 points)? All alternative definitions are applicable at the same time, but some meanings are separated or confused. Alternative 1: The definitions provided previously overlap and are thus confusing definitions to co-exist in explaining one and the same concept. Alternative 2: They overlap and are thus confusing definitions to co-exist in explaining one and the same concept (2 points). d) Mention 2 deliverables of housing in this context (2 points). Any two of the following 6 is correct: Shelter from the elements, value/wealth/equity for owners, shelter from taxes, accessibility of services, accessibility of work, accessibility neighbourhood, social status, and/or right to privacy.

Exam answers- Question 1 e) Describe why housing is important for understanding neighbourhood dynamics (4 points). Housing is the principle mechanism through which urban neighbourhoods change: moves of households/ activities (demographic change), new developments (demographic, economic, social, cultural), aging of real estate, and/or fluctuations in house prices. Not all examples are necessary. Answer must reflect some idea of how neighbourhoods change through housing or rather the matching process of households and housing (stock).

Exam answers- Question 1 f) Explain, by using an example, why housing can mean different things to different people at the same time (4 points). Housing can mean different things to different people at the same time. First it is an investment good for the developer, and later it can be an investment good for the owner-occupier, anticipating that the property will increase in price. To the construction company housing is an industry, to the user the same object can mean shelter. Any logical explanation is OK, as long as definitions of housing are matched as described under b. So far all answers could be retrieved/ could have been studied in Bourne’s chapter 2 and lecture slides of the introduction/ first lecture.

Exam answers- Question 2 a) Mention the three classic ways of modelling housing market behaviour (6 points). Gravity Models, Push-Pull Models, Markov Chains (2 points each, up to 6 points). b) Explain the main differences in the assumptions of these models (5 points). Gravity models assumptions are based on the characteristics of places, push-pull models are based on the individual assessments of characteristics of places, Markov chains are based on the probabilities of moving to each home in the chain of housing vacancies (4 points plus 1 point for the latter).

Exam answers- Question 2 c) Mention the two newer approaches (4 points). Microeconomic and life course approaches (2 points each). d) Name one main difference and one commonality between the two (4 points). They both view moving behaviour as adjustment mechanisms: to adapt to new needs in the household and/ or dissatisfaction. They both incorporate micro-economic decision making. …

Exam answers- Question 2 The life course perspective however, adds individual perspective on how a move may occur (by changes in the household, labour, education and housing career). In other words, demographic events (which are universal) are introduced as milestones that help understand housing market behaviour. The life course theory forges theoretical and empirical work. (2 points for one difference, 2 points for one commonality, up to 4 points in total.)

Exam answers- Question 2 Give two reasons why short distance moves occur more frequently than long distance moves (3 points each, up to 6 points in total). Short distance moves occur more often because the dominating motive for moving (housing and household motives) relate to housing characteristics (3 points). (Larger house required because more members in the household. A better house, etc.) These motives do not incur a long-distance moves like moving for a job might do. If you move over a short distance, you do not need to change jobs in most cases (another 3 points). Predominance of motives for moving thus incurs more short-distance moves.

Exam answers- Question 3 III. Touch upon: The parallel careers or domains in the life course (mention at least three, one point each, up to a maximum of 3 points). • Household career • Housing career • Education career • Labour career

Exam answers- Question 3 • How these trigger a move, by describing examples (2 points each, up to a maximum of 6 points). Household career triggers a move by: cohabitation, child birth, divorce/separation, remarriage, widowhood through demand for less or more space, or a necessary change in location. Education career triggers a move by: enrolling into higher education that is not in the same place as your parental home. Labour career triggers a move by changing jobs in a location to where there is no sustainable daily commute possible. Generally this is due to distance.

Exam answers- Question 3 • Name 2 out of 4 life course stages (2 points each, up to a total of 4 points). The four life course stages are: home making, child bearing, child rearing, post child. • Describe what the link is between the life course theory and housing demand (up to 3 points). Households create a set of circumstances by their combined behaviour. Alternatives are OK, within reason.

Exam answers- Question 3 • Explain what was so new about the life course theory (name 3 innovative aspects out of the 6 discussed for 3 points each, for up to 9 points in total). • Convergence of theory and empirical work • Attention to individual households (micro-level) • Residential location topic was brought into the centre of housing studies • Individual action was linked with social change and social structure • Demographic events were introduced as milestones and critical transitions in people’s lives • The mechanisms are universal, applying to almost anyone, and throughout history

Exam answers- Question 4 Touch upon: The definition of social exclusion (3 points). Social exclusion: Social exclusion occurs when people or groups decide consciously or unconsciously, to put up barriers, preventing others from full and equal participation, leading to a loss of rights, loss of power, lack of integration in society, affecting the ability to live fully.

Exam answers- Question 4 • Background factors of social exclusion (3 for 2 points each, up to a total of 6) Backgrounds of social exclusion: racial discrimination, economic discrimination, gender discrimination, health discrimination, poverty discrimination, neighbourhood discrimination.

Exam answers- Question 4 • The differences between social exclusion through housing and social exclusion from housing (2 points) Exclusion from housing focuses on unmet housing demands while exclusion through housing focuses the shift outwards: the impact of housing on broader societal participation.

Exam answers- Question 4 • The definition of spatial segregation (3 points) Spatial segregation: Spatial effect of social exclusion. • The term ‘social location’ (2 points) Social location: Through housing, one’s residential location and with that access to other services than housing is determined.

Exam answers- Question 4 • A description –with examples- of “neighbourhoodism” (4 points). “Neighbourhoodism” is a diminished access to services such as food deliveries, taxis, home insurance, housing elsewhere due to the reputation of the neighbourhood where individuals reside.

Exam answers- Question 4 • How the spatial assimilation model aims to solve spatial segregation issues and why its applicability, in cases of “neighbourhoodism”, is limited (5 points). The spatial assimilation model assumes that newcomers start at the bottom of the socio-economic ladder. Once their socio-economic status improves, they will leave their initial neighbourhoods and start a cultural assimilation process. Cultural assimilation process does not account for limited possibilities of doing so by discrimination. Neighbourhoodism is one form of discrimination: housing distributors may be biased about neighbourhoods with a certain reputation, limiting individuals’ opportunity structure.

Match and explain Landlords Mortgage lenders Real-estate agents Planners Residents X Steering Family-based planning X Discrimination Gender-based planning X Redlining Exam answers- Question 5 Items marked with X do not have to be considered. (One of both at the right side must be considered though; 1 point each)

Exam answers- Question 5 Match (1 point each) and explain (2 points each, total of 12 points) • Steering: Real-estate agents may direct certain buyers/ renters to certain areas (bias) • Family-based planning: Planners often design types of neighbourhoods based on a nuclear family’s needs while nowadays one-person households and households without children are increasing • Discrimination: Putting up barriers for or denying access to groups of people based on certain characteristics • Gender-based planning: Planners often design types of neighbourhoods based on a nuclear family’s needs while nowadays single women increasingly run their own household • Redlining: Refusal to provide loans/ mortgages for objects in low-income neighbourhoods or neighbourhoods with poor housing conditions

Exam answers- Question 5 Explain: • Social class hypothesis (4 points) Social class hypothesis assumes that all spatial segregation can be explained by socio-economic characteristics

Exam answers- Question 5 Explain: • How government policy of multiculturalism may lead to social exclusion (4 points) Multiculturalism may lead to social exclusion if sufficient access to language books and newspapers decreases literacy and English proficiency among second (or more) generation immigrants.

Exam answers- Question 5 Explain: • What the ethnic enclave model is based on (2 points) The Ethnic Enclave Model is based on the notion that bonding with the own (ethnic) community does not necessarily weaken in the course of time. Spatial assimilation (acculturation) therefore is not necessarily a goal for ethnic groups, despite increased wealth/ higher income/ greater social mobility.

Exam answers- Question 5 • What chain immigration is (1 point) Immigrants chose to live near their previously established immigrant friends and relatives resulting in a process named chain immigration.

Exam answers- Question 5 Explain: • How researchers who adopted the ethnic enclave theory would feel about the criticism on multiculturalism (2 points) Ethnic Enclave researchers will stress the advantages of threshold populations for not only language newspapers, but also for specialized products, churches and opportunities in ethnic entrepreneurship (often within the home). ANY QUESTIONS ABOUT THE MIDTERM?

Neighbourhood transitions • Aging of real estate • Changing values of housing as a consequence of neighbourhood transitions • Depreciation • Declining housing quality • Mismatches between housing and households • Filtering downward or upward • Residential relocations • Changing composition of households • Changing quality of housing and neighbourhoods

Introduction to neighbourhood transitions • Mechanisms of change • Upward/ downward changes • Theories/ concepts • Effects of revitalization • Literature

Neighbourhood transitions • When prices are low, some inner city environments are prone to gentrification • Improvement in quality housing and neighbourhood • Services may change (daily necessities get crowded out by trendy shops, restaurants and branches) • Reduction in the availability of low cost housing • Ultimately: social polarization and displacement?

Six major processes of change on the housing market • Occupancy turnover and the movements of households within the housing stock • Filtering process and changes in housing quality • Housing and neighbourhood change: arbitrage • Progression of housing vacancies through the stock (vacancy chains) • Spatial variations in house price changes • Revitalization and the return-to-the-city movement: gentrification (Bourne, 1981)

Households move through the housing stock • Matching of households and housing • Incomes and house prices act as the broad constraints on the likely behaviour of households and their occupancy of the housing stock • Most moves within same tenure, but there is movement between segments, from private rental to owner-occupied • Changes within housing stock (conversion) • Simplified: Cheap, small rental housing in CBD and expensive large owner-occupied housing on the edge of the city

Filtering • Any change in the relative position of the housing unit or the household in the inventory, or matrix, of housing units in the area: filtering up and filtering down • History concept: Innermost rings in the city were occupied by a succession of social groups of decreasing income. • Each zone filtered down over time.

Filtering Based on specific assumptions from the ecological literature: • Demand for housing related to income (newer and more accessible) • Housing depreciates with age, reducing the flow of housing services • Encouraging those with sufficient income to relocate • New construction is necessary and stimulating for filtering • Welfare component: housing could filter down to lower income groups, improving their housing quality • Park, 1925; Hoyt, 1939; Ratcliffe, 1949

Filtering • Filtering up only occurs when price declines more rapidly than housing quality (Grigsby, 1963) • Filtering up only occurs when the change is to a more preferred bundle of housing services (Leven, 1976) • Households can undergo filtering without moving: passive filtering • Households can undergo filtering by relocating: active filtering • Filtering recognizes the importance of external factors in determining housing conditions • Filtering incorporated consumer preferences and expectations about housing services

Types of filtering • Changes in supply • Changes in the position of households • Changes in the matching of households and housing • Changes in household welfare

Filtering and policy • Policy thinking: if rate of new construction is faster than the rate of filtering downward, most lower-income households will be able to improve housing • Lacks regard for distribution by price and quality • Justifies construction of middle- and upper-income housing • Assumption: New housing will exceed household formation and real incomes will rise

Criticism for filtering • Housing of reasonable quality does not filter down and thus does not become available to lower-income groups • Other reasons of unavailability: • Conversion to other uses or other forms of tenure, often for investment purposes • Demolishment for roads, redevelopment, or parking • Even if housing filters down, there is lack of mortgage availability, high rents, discrimination, and a low housing quality • Filtering may not be an efficient or humane way of providing housing

Arbitrage model of neighbourhood change • A more recent version on filtering • Placed central are the conditions and mechanisms that move boundaries between neighbourhoods of different socio-economic status and ethnic differences in an unstable housing market • This approach unites elements of neighbourhood change with sub-market interrelationships, filtering and housing preferences • Differs from filtering: direct response to changes in preferences • Leven, 1976; Little 1976

Arbitrage model • Mismatch of supply and demand • Shift of boundaries between neighbourhoods • Self-generating (self-fulfilling expectations of transitions) • Access to housing by higher-income groups • New housing realized outside neighbourhood • Assumption: people want to live with similar people

Arbitrage model As boundaries shift, house prices differentiate according to four levels: • Centre of high status area • Near boundary of low status area, in high status area (locational discount) • Near boundary of high status, in lower status area (premium) • Centre of lower status Demand influences prices and moves boundaries

Arbitrage model • The direction in which a boundary shifts is dependent on which group exercises the largest demand on housing • If this is a low income group: higher-income groups may be ‘blown out’ by the demand, leading to a continued deterioration of the housing stock • This is the core of the process of arbitrage • Higher income households perceive a future decline in housing services through neighbourhood transitions • They seek to move out to newer housing

Arbitrage model • Lower income households can not exercise that much choice • Shrinking demand because of deterioration, demolition and abandonment • Only profitable market alternative: conversion (e.g. multi-family) = arbitrage • Discounted housing leads to lack of maintenance and physical deterioration

GGR 357 H1F Geography of Housing and Housing Policy