Homeownership Rate and Other House Price Determinants Impacts on New House Prices in Colombia

Homeownership remains a preferred form of tenancy in different parts of the world. The attractions of security, stability, investment potential and a sense of pride outweigh the fear of price instability. For this reason, the Colombian government has encouraged in recent years, various demand policies that have sought to promote the increase in the number of homeowners. However, these ideas could have a severe impact on prices in the real estate market. Therefore, this study seeks to examine the effect of homeownership rate on new house prices in an emerging country with low real estate ownership, credit restrictions and average per capita income. The study uses panel data model to examine the influence of housing tenancy and other variables on the variation of housing prices in Colombia. Data were obtained from various sources including the Central Bank of Colombia, Financial Superintendence of Colombia, and National Administrative Department of Statistics of Colombia. The results show that homeownership rates have a positive effect on the price of new homes, which supports the hypothesis of the research. The population growth of the cities is the factor that is most relevant when explaining the price variations.

The Evolution of Immigrants’ Homeownership in Germany

Recently, the homeownership rate of immigrants in Germany has increased by more than 20 percentage points. To shed light on this sharp rise, this paper investigates the driving forces of the trend in the homeownership rate of immigrant households in Germany between 1996 to 2005 and 2001 to 2011 using a probit-based non-linear decomposition method. Empirical findings suggest that 50 % of the change in immigrants’ homeownership rate within the first time period can be explained by characteristics such as age and educational attainment. In the second time period, the explanatory power of characteristics is almost zero, indicating that it is rather the favorable economic and institutional environment as well as changes in immigrants’ tenure choice process that contributed to the substantial increase in immigrants’ homeownership rate in Germany. We additionally find that housing quality of immigrant homeowners has slightly improved as well, but that there is still a substantial nativity gap in housing quality among tenants as well as among owners.

Housing Affordability: Local and National Perspectives

This paper presents a new approach to measuring affordable homeownership. Future changes in the homeownership rate will depend on the ability of today’s renters to become homeowners. Our proposed housing affordability for renters index (HARI) focuses on how affordable homeownership is for current renters. We look at the share of renters who reported the same or more income than those who recently purchased a home using a mortgage, in effect measuring how many renters have enough income to purchase a house. For each metropolitan statistical area (MSA), we construct a local area index that compares renters and borrowers in the same MSA and a national index that compares renters nationwide with homeowners in a specific MSA. We rely on the Administrative Data Research Facility to construct these indices. This database, constructed by the Urban Institute, aggregates American Community Survey variables and Home Mortgage Disclosure Act variables to common geographies. The new indices reveal that slightly more than a quarter of current US renters have incomes higher than those who recently became homeowners using a mortgage. The indices also reveal how housing affordability differs over time and across race/ethnicity groups and locations. We demonstrate the value of our new indices by showing that they are predictive of homeownership rates: MSAs that are deemed more affordable by our index have higher homeownership rates.

FACTORS AFFECTING HOUSING PRICES IN MALAYSIA: ANALYSIS OF THE SUPPLY SIDE

Buying a house is a major decision that homebuyers will make because expenditure on homeownership has an influence on the homeowner’s quality of life. The housing price also influence developers’ revenues and profit margins. Developers produce houses to make profits, however, with the increase in housing prices, homeownership rate and developers’ profit performance will be affected. This study examines the reasons why housing prices are increasing in spite of the government’s ‘cooling’ measures. Through a cross-sectional survey questionnaire, comprising 24 causes and 115 members of the housing developers and designers teams, 13 influential factors to the increase in housing prices were found. Additionally, the participants were also inquired on the five most influential factors causing the increase in housing prices. The factors include the shortage of materials, quality of materials, strategic factors, housing location and availability of transportation system. The results of the study are useful to developers, homebuyers and policymakers towards reducing housing prices.

FACTORS AFFECTING HOUSING PRICES IN MALAYSIA: ANALYSIS OF THE SUPPLY SIDE

Buying a house is a major decision that homebuyers will make because expenditure on homeownership has an influence on the homeowner’s quality of life. The housing price also influence developers’ revenues and profit margins. Developers produce houses to make profits, however, with the increase in housing prices, homeownership rate and developers’ profit performance will be affected. This study examines the reasons why housing prices are increasing in spite of the government’s ‘cooling’ measures. Through a cross-sectional survey questionnaire, comprising 24 causes and 115 members of the housing developers and designers teams, 13 influential factors to the increase in housing prices were found. Additionally, the participants were also inquired on the five most influential factors causing the increase in housing prices. The factors include the shortage of materials, quality of materials, strategic factors, housing location and availability of transportation system. The results of the study are useful to developers, homebuyers and policymakers towards reducing housing prices.

Credit constraints and the delay of homeownership by young households in Japan

Purpose Japan has been suffering from a decline in the rate of young adults homeownership for a long time. The reduction of the homeownership rate for young adults suggests a delay of tenure transition from renting to owning a home. Such delays further imply that there is insufficient wealth accumulation and a low level of welfare. This paper examines these influences of the credit rationing and the credit rationing impact on the reduction in the young adults’ homeownership rate. Design/methodology/approach Credit rationing impacts the timing of house purchases and the value of the houses at the same time. This paper estimates these impacts jointly using a simultaneous equation system (minimum distance estimation) and the micro data on Japan. Findings This paper divides the effect of credit rationing on the timing into direct and indirect effects. The former is the rationing effect on timing, keeping the other variables constant, while the latter is the effect via changes in house values. This paper finds that the indirect effect reduces the rationing effect on the timing by decreasing house values. Furthermore, the results show that credit rationing delays home acquisition by prospective young owners (direct effect) and necessarily lowers the quality of houses they purchase. Originality/value In the previous papers, the endogeneity among the variables related to the housing purchase was not addressed. To separate the endogeneity of the timing from the house value, this paper applies the simultaneous equation model. Furthermore, this paper exhibits that there are direct and indirect effects of credit rationing on the timing of housing purchase made by young households. None of the previous papers recognize these two effects.

Homeownership and the American Dream

For decades, it was taken as a given that an increased homeownership rate was a desirable goal. But after the financial crises and Great Recession, in which roughly eight million homes were foreclosed on and about $7 trillion in home equity was erased, economists and policymakers are re-evaluating the role of homeownership in the American Dream. Many question whether the American Dream should really include homeownership or instead focus more on other aspects of upward mobility, and most acknowledge that homeownership is not for everyone. We take a detailed look at US homeownership from three different perspectives: 1) an international perspective, comparing US homeownership rates with those of other nations; 2) a demographic perspective, examining the correlation between changes in the US homeownership rate between 1985 and 2015 and factors like age, race/ethnicity, education, family status, and income; 3) and, a financial benefits perspective, using national data since 2002 to calculate the internal rate of return to homeownership compared to alternative investments. Our overall conclusion: homeownership is a valuable institution. While two decades of policies in the 1990s and early 2000s may have put too much faith in the benefits of homeownership, the pendulum seems to have swung too far the other way, and many now may have too little faith in homeownership as part of the American Dream.