GGR 357 H1F Geography of Housing and Housing Policy

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DR. AMANDA HELDERMAN

Session 6

Neighbourhood transitions

June 4, 2008

GGR 357 H1F

Geography of Housing and Housing Policy

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Session 6: Neighbourhood transitions

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

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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

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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

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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

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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:…

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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 [email protected]

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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.

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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)

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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).

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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.

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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).

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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.

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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).

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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. …

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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.)

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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.

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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

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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.

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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.

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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

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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.

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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.

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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.

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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.

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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.

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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.

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Match and explain

Landlords Mortgage lenders Real-estate agents Planners Residents X

Steering Family-based planning X Discrimination Gender-based planning X Redlining

Items marked with X do not have to be considered. (One of both at the right side must be considered though; 1 point each)

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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

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Explain:• Social class hypothesis (4 points)

Social class hypothesis assumes that all spatial segregation can be explained by socio-economic characteristics

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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.

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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.

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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.

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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?

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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

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Introduction to neighbourhood transitions

Mechanisms of change Upward/ downward changes Theories/ concepts Effects of revitalization Literature

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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?

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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)

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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

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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.

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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

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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

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Types of filtering

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

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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

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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

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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

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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

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Arbitrage model

As boundaries shift, house prices differentiate according to four levels:

1. Centre of high status area2. Near boundary of low status area, in high status area

(locational discount)3. Near boundary of high status, in lower status area

(premium)4. Centre of lower status

Demand influences prices and moves boundaries

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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

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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

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Arbitrage model and non-residents

Institutional lenders reinforce expectations of neighbourhood change by withdrawing investments, refusing loans, or demanding higher down payments

Speculators may purchase housing but want a quick return which further accelerates under-investment and deterioration

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Vacancy Chains

Perspective related to filtering Directly links housing units involved in household

relocations Tricky to understand because, like housing careers and

Markov Chains, they do not focus on households but on ‘vacancy’ that is being displaced with every step (the moves thus go “in the opposite direction”)

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Example: hermit crabs

Moves/ residential mobility

Vacancy

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Vacancy Chains

Vacancy chains are short because of diversity in the housing stock and because of the weakness of the method:

Especially short when there are a lot of new households and in-migrants, and where demolitions take place, chains are shorter when new public sector housing is constructed

No or few homes are left behind in such cases

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Criticism on vacancy chains

Links imply causal linkage that may not be existent (households do not know each other, no common denominator)

Unsuitable for measuring if quality of housing for the poor is improved by filtering because the poor seldom appear in such chains, except when social housing is constructed

Descriptive index on the aggregate level Insight into turnover generated by new construction

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Spatial variations in house prices

Price: most common index of housing market performance

Four sets of factors that determine price:1. Structural characteristics of the house2. Neighbourhood characteristics (phys & soc)3. Location (accessibility)4. Institutional behaviour (fin. & real est. agents)

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Stuctural characteristics of the house

Size/ Floor area Lot size Number of rooms Level of improvements Garage Air Conditioning

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Neighbourhood characteristics

Physically attractive/ scenic Pollution Higher-income neighbours

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Location

Accessibility CBD (Hoyt, 1939) Multi-centred city: many work locations Not the most important characteristic anymore, but

there are still some signs of it

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Hedonic price estimation

House value hard to determine sometimes Not many comparable units Individuals may value characteristics differently Solution: hedonic price estimation, which is the result

of multiple regression of housing characteristics

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Return-to-the-city

Return-to-the-city movement since the 1970s, even though trend has always shifted between high- and low-income areas

Suburban middle- and higher-income households Many labels: revitalization, gentrification, white-

painting

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Revitalization

Improvement in housing and neighbourhood quality, combined with increase of average income

Private action, individual or corporation action Quasi public housing associations, self-help groups,

direct public grants action Streets or single houses Usually within fixed distance of CBD (± 3 km)

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Gentrification

The investment of urban space for the use of a more affluent clientele (Hackworth & Rekers)

More explicit class connotation than revitalization Traditional working class neighbourhoods are invaded

by middle and upper income groups (Hamnett, 1973)

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The Usual Areas

Historic and attractive central area High proportion of professional occupations/ offices Tight housing market Older housing with architectural merit Inner city amenities (parks, cultural institutions, etc.) Absence of ethnic strife Relative difficulties in commuting from suburbs

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The Usual Circumstances

Demographic shifts (dink, smaller families) Employment (dual income): Disposable income and

share to spend on housing has increased Costs suburban housing has increased since the 1970s,

while costs of commuting increased Shifts in tastes and housing preferences

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Image branding/ packaging

Developers can do a lot to create an image for a neighbourhood

Financial institutions have influence by expediting transitions by extending mortgages to ‘in-areas’

Ethnic packaging Ethnic commercial strips are marketable branding

mechanisms, intended or not

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Ethnic packaging

Mistaken identities of areas such as Little Italy Only 10% of population Italian by mother tongue, even

less by place of birth or spoken language Dissonance between cultural and commercial identities Since the 1980s and 1990s there is a recognition for

the importance of culture Complication: sometimes culture is produced by

economic interests, not autonomous

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Dualism between culture approach and economic approach

Culture approach: gentrification is the spatial expression of a critical class politics

Consumer dominance Neighbourhoods gentrify because of changing tastes

and preferences Rejection of the suburbs because of the distance to

work, isolation, and lack of diversity Cultural humanism as dominant influence: humans

have a certain degree of decision-making autonomy, and are not easily predictable (Ley, Caulfield)

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Economics placed central: gentrification is caused by the availability of inexpensive real estate.

Rent gap theory: many neighbourhoods experienced disinvestment in inner-city, leading to a decline in potential rent (=highest and best use)

Gentrification takes place where the potential rent is far above the actual rent supply and concentration of devalorized land is necessary

Gentrification is facilitated by developers and governments Marxian economics is the primary influence Smith/ Badcock/ Clark

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The early 1990s recession brought an end to large scale gentrification, seemingly supporting the culture hypothesis

Note: Demographics pointed in the direction of there being more people that would be interested in living in the suburbs at that time (maturing families)

Two sides of the same coin, rather than a polarity of culture and economics

Dualism is only problematic if ethnic identity may be marketed to sell real estate, because it draws the attention away from the way cultural amenities are strategically produced

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Toronto examples

Some areas have historical cultural identity, and some don’t

Little Italy has an Italian history, but there has been a shift since the 1970s in the type of economy and population: from traditional and family orientated to trendy, the ethnic swoosh is all that remained of the original Little Italy

College degree went up from 2.5% in 1971 to 32.5% in 2001

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Toronto examples

A history of many identities: Greektown on the Danforth (Cuban, Afghani, Japanese, Greek)

Gentrification changed the economy, the population and housing

House value and rent higher than for metropolitan area as a whole, exclusion of everyone except upwardly mobile young professionals

More self-conscious promotion has led to a less trendy area than Little Italy, but still a happening place

Chains moved in

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Branches moving into gentrified areas

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Toronto examples

Corso Italia/ St. Clair area Some Italian history, though more recent than Little

Italy Fashionable and high end, geographically and culturally

isolated from rest of downtown, less tourist oriented The feel remains more working class and more Italian

than yup, even though there are early signs of gentrification

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Toronto examples

Gerard India Bazaar Interestingly, no ethnic history except for a Hindi movie

theatre (Bollywood productions) that drew in the East-Indian crowd from all over the GTA

Entrepreneurs noticed the interest and started opening business but the residential identity was never parallelled

Many immigrants, mostly Chinese Values of rent are below the metropolitan level and

fluctuate considerably Incomes have declined in this area

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Culture/ Economy

Inclusion of culture seems analytically helpful for the study of cities

Reproduction of ethnicity for consumption is rarely to promote displacement of residents

Instead it attracts YUPs, whose activities are government supported (all levels of government)

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Consequences of revitalization

Physical improvement of housing stock in the area Physical improvement of neighbourhood Higher prices and rents Reduces inventory of low-cost housing Dislodgement of original residents Social fabric of neighbourhood decreases Demand for local services (daily grocery shopping,

schools) changes Land use densities and patterns Not necessarily bad or good…

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Literature for this session

- Hackworth, J. & J. Rekers (2005), Ethnic packaging and gentrification. The case of four neighbourhoods in Toronto. Urban Affairs Review 41/2, pp. 211-236.

- Slater, T. (2005), Gentrification in Canada’s cities. In: R. Atkinson and G. Bridge (eds), Gentrification in a global context: the new urban colonialism, Chapter 3. London/ New York: Routledge, pp. 39-56.

- Smith, N. (1987), Gentrification and the rent gap. Annals of the Association of American Geographers, 77/3, pp. 462-465.

Documents

GGR 357 H1F Geography of Housing and Housing Policy