Housing Tenure, Evictions, and Property Rights Restrictions
Sunday, Jan. 7, 2018 10:15 AM - 12:15 PM
- Chair: Edgar Olsen, University of Virginia
Diverted Homeowners and Rental Affordability
AbstractAlthough much has written about the housing market collapse in 2006 and the decline in rental affordability, studies linking the two have been relatively scarce. This paper posits a direct link between shifts in homeowner/rental demand. In so doing, this paper notes that 8.4 million would-be homeowners (the expected number given market and demographic characteristics in 2000) have been shifted to renting or have left the housing market in 2015. These diverted homeowners triggered a cascade of adjustments throughout the rental housing market, suggesting that a one-percentage point lower homeownership rate than was expected increases median gross rent by about 14 dollars, the share of rental households paying 30% or more of household income on rent by 0.83 percentage points, and the share of households paying 50% or more by 0.57 percentage points.
The Effects of Residential Evictions on Low-Income Adults
AbstractLarge rent increases since the Great Recession have increased attention to the consequences of housing instability, with particular focus on residential evictions. We assemble novel data linking housing court cases in New York City with administrative data from a number of sources. We leverage the random assignment of cases to courtrooms to estimate the causal effect of evictions on residential mobility, homelessness, employment, earnings, receipt of benefits, and health. We find that evictions in housing court substantially increase the probability of applying to a homeless shelter and time spent in shelter. Evictions also increase residential instability, causing households to move more often beyond their initial move out. Evictions reduce employment and quarterly earnings only slightly and have small or nonexistent effects on benefits receipt. Our results suggest that if residential instability and homelessness are costly to individuals and society, policies that provide liquidity to low-income renters, insure them against negative shocks, or help smooth housing transitions could be welfare-enhancing.
Property Right Restriction and House Prices
AbstractUsing a natural experiment in Singapore, we examine the economic impact of temporarily restricting an owner’s right to transfer his property. Executive condominiums (ECs) introduced to address housing affordability for middle class are subject to restrictions on their transferability within the first ten years unlike private condominiums. Among transacted units carefully matched by their location, completion and transaction dates, and complex- and unit-level characteristics, we find that selling prices of new EC units are about 17.23% lower than their counterpart private condominium units. After the fifth year when EC owners can sell their units to domestic residents but not to foreigners, the price gap between ECs and private condominiums narrows to about 10.88%. Finally, the prices of ECs and private condominiums converge after the tenth year when all the restrictions on private property rights are removed. These results suggest that placing property right restriction and complete illiquidity for a temporary period has a significant, negative impact on property prices for this period. An implication for affordable housing policies is that middle-class beneficiaries enjoy both initial price discount and potential price appreciation.
John C. Weicher,
President’s Council of Economic Advisers
- R2 - Household Analysis
- J0 - General