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Houston, Atlanta Among 15 U.S. Cities to Buy Affordable Homes

Although real estate is becoming increasingly unaffordable for the typical American, there are still places where its possible to become a homeowner on an average income.

A report compiled by CNBC’s Make It identified 15 cities where the qualifying income to purchase a home with a 10 per cent or 20 per cent down payment is an annual salary of $60,000 or less, based on data from the National Association of Realtors’ Metropolitan Median Area Prices and Affordability index from the second quarter of 2019.

The data assumes a 4.1 per cent mortgage rate for all areas and a monthly principal and interest payment limited to 25 per cent of a resident’s income.

The report listed Cleveland, Ohio; St. Louis, Missouri; Lincoln, Nebraska; Baton Rouge, Louisiana; Atlanta, Georgia and Philadelphia, Pennsylvania among the 15 cities where you can become a homeowner while earning $60,000 a year or less Also listed were three cities in Texas which are Houston, Dallas and San Antonio. Others are Jacksonville, Florida; Spokane, Washington; Charlotte, North Carolina; Nashville, Tennessee; Orlando, Florida and Milwaukee, Wisconsin.

Source: dailytrust

“The Housing Affordability Gap is Equivalent to 1% of Global GDP”


The McKinsey Global Institute take on housing affordability

Housing affordability is currently one of the most complex policy challenges our societies in Europe are faced with. As part of our work to identify solutions to this challenge, and in light of the launch of the ‘State of Housing in Europe’ 2019 report next autumn, we inaugurate a series of interviews with institutions and international stakeholders that have been looking at affordable housing, publishing influential reports and generating valuable data.

Our first guest in this series is Dr. Jan Mischke, a Partner at the McKinsey Global Institute (MGI), McKinsey’s business and economics research arm, based in Zurich. Jan leads the MGI work on competitiveness and growth in Europe, and on infrastructure broadly defined on a global basis. In addition to in-depth analyses of more than 10 countries and a series of reports on Europe, he has led global efforts on affordable housing, infrastructure, and manufacturing.

  • Why would you say it’s important to look into housing affordability?

Access to decent, affordable housing is so fundamental to the health and well-being of people and the smooth functioning of economies that it is imbedded in the United Nations Universal Declaration of Human Rights. It is also an economic factor. For California, for instance, we estimate that the state loses 6 percent of state GDP due to the housing shortage from missing investment and consumption crowded out by elevated housing costs.

  • Can you name one phenomenon/issue which shows a problem with housing affordability? How does this manifest in data/trends that can be monitored?

We focus on the gap between what households can afford to pay for housing out of their income vs. the cost of decent housing as primary metric for assessing the issue. On this basis, worldwide, MGI has estimated that some 330 million urban households live in substandard housing or stretch to pay housing costs that exceed 30 percent of their income. This number could rise to 440 million households by 2025 if current trends are not reversed. The housing affordability gap is equivalent to $650 billion per year, or 1 percent of global GDP. In some of the least affordable cities, the gap exceeds 10 percent of local GDP. Over time, the evolution of income vs. housing cost can serve as a very simple indicator of trends.

  • If you have to choose one element as major cause of lack of affordable housing, which one would it be?

Affordability issues often start with the cost of and access to serviced land and the respective zoning rules that would allow expanding housing supply. This can make housing markets highly inelastic, with households taking up ever higher debt as house prices skyrocket without much expansion of supply. In London, for instance, house prices increased more than 5-fold over a generation from 1990 to 2015, but annual housing completions edged up only about 40 percent. Inefficient construction then adds to the problem.

  • Can you name one or more solutions which could help tackling this?

Policymakers have a number of tools to increase supply, incl. transit-oriented development, or making better use of underutilized or vacant sites incl. public land. Seoul, for instance, allows floor-area ratios that are up to 20 times higher in better-connected neighborhoods than in more distant areas. Other cities can follow this approach. Analysis in San Diego, for example, found that increasing the density of residential developments in a half-mile radius around public transport nodes could expand the city’s housing stock by close to 30 percent. And our forthcoming research on modular construction suggests that this methodology, well applied, could deliver 20 percent cost savings vis-a-vis traditional on-site delivery.

Source: housingeurope

Meet Dubai Teen Who Turns Waste Into Affordable Housing

Dubai: Normally when villagers in rural Zambia need land to set up home they approach the chief on their knees with offerings of goats or chickens.

Eighteen-year-old Dubai-based Indian expat Kabir Malhotra did the same sans livestock and armed only with an idea, but came away with a hectare.

What did he propose? For the villagers to do away with mud huts and use reclaimed industrial (silicomanganese) waste (known as slag) from a local factory to produce more rigid and affordable housing. Give him some land to trial this method and he would show them how. The chief obliged.

“Mud bricks last two months to two years depending on the soil composition, and 40 per cent of the bricks don’t make it through the last stage of formation, so a lot of effort goes unutilised,” said the Dubai International Academy student, who was interning at an African alloy factory at the time of last year’s tribal encounter.

“My bricks are three times stronger, last 40 years and don’t absorb as much moisture,” he added.

On top of this the material to make Kabir’s bricks is virtually free.

“Factories often pay you to take slag away because they don’t want the environmental headache of what to do with it next,” he said, “which means the only expenditure for the production of our bricks is cement and dry ash,” which he’s managed to fund through sponsors.

It also does away with the environmental damage of digging for mud bricks, and in fact prevents more environmental damage by finding another use for waste industrial produce that is completely safe to recycle for use in construction.

For every tonne of steel produced approximately 600kg of slag is dumped, but it could be used to build homes, said Kabir, who has written a paper on the subject to be included in an international construction journal this week.

The chief was so sold on the idea that he granted Kabir some land, where he has now built six 10×12 foot houses over the last two months with plans for 14 more before the end of the year.

The idea to find a sustainable solution to the lack of affordable housing first came to Kabir when he saw the slums of his native Delhi, where he has since approached a similar factory in Vishakhapatnam to start another project based on his success in Zambia.

190809  Kabir Malhotra 3
Kabir with his team of labourers and slag bricks. The only expense to produce the bricks is cement and dry ash.Image Credit: Kabir Malhotra

He’s even gone to sponsors in India to try and fund the electricity and water supply to his houses in Zambia.

“I knew action needed to be taken, but the situation was definitely more pressing in Zambia,” he added. “Two thirds of the population there spend 50 per cent of their income to access quality housing and that’s absurd.

“This is what forces people to live in mud brick houses, but the conditions are dangerously unhygienic due to constant leakages and copious amounts of bacteria.

“On the other hand, our alternative is sustainable, because the primary material in the production process is being recycled and reused, and it’s for a very good cause,” he added.


“Similar alloy factories will begin operating in Abu Dhabi’s Kizad Industrial area over the next six or seven months,” he said. “As soon as this happens, I’ll take a look at the composition of their waste and try to establish the same concept here.”

190809 Kabir Malhotra 2
The first house built using bricks made from slag. Kabir has built six 10×12 foot houses over the last two months.Image Credit: Kabir Malhotra

One market where more affordable housing materials would help in the UAE is in the construction of workers’ accommodation, he said.

“Most companies provide workers with housing, but building a proper society would be extremely helpful in certain cases.

“If the government noticed how sustainable our production process is, they would definitely support the movement and get involved more seriously. In my opinion, there is a huge scope for the application of this concept in the UAE, and in the near future we can start producing workers’ accommodations using just these bricks.”

Is Kabir the first to do this?

There are more than 20 types of slag in the steel industry and each one can be put to a different use, explains Kabir. Even the same slag has different properties. To his knowledge, this type of slag and its particular composition hasn’t previously been used at the ratio he has applied of 3:1:1 (three parts of slag, to one part dry ash and one part cement) in other parts of the world. But he is, he claims, the first to use it to build homes in southern Africa, as silicomanganese slag was just being disposed of by local factories. As he has not technically invented anything and just experimented with different ratios to find the most durable brick, he does not plan to apply for a patent.

Source: gulfnews

Climate Change Exacerbates the Affordable Housing Shortage

A new report is urging lawmakers to fight the affordable housing crisis as part of a larger effort to prepare communities against the worst effects of climate change.

The Center for American Progress report released Thursday found that there is a national shortage of 7 million homes for low-income renters. This shortage disproportionately affects disabled people and minority communities that also have the fewest resources to recover from natural disasters linked to climate change.

“When disaster strikes, preparation is the key,” said Guillermo Ortiz, report co-author and research assistant for energy and environment at the left-leaning policy think tank. “Who is prepared and who has money to prepare varies widely.”

The report recommended supporting equitable evacuation and disaster recovery, expanding investments in rental and homeless assistance programs, prioritizing equitable housing policies, investing in lasting infrastructure, and increasing funding for disaster mitigation and climate change adaptation.

Heidi Schultheis, report co-author and senior policy analyst for CAP’s Poverty to Prosperity Program, said it is important to talk about affordable housing and climate change together, rather than treating them like silos.

“All research shows they are not separate issues, they are one and the same problem,” she said.

Valerie Novack, report co-author and Portlight fellow at the Disability Justice Initiative, said emergency response and recovery for disadvantaged people has been slow in the past. After Superstorm Sandy in 2012, for example, many elderly and disabled residents were stranded in their apartments for weeks. And out of the 33 New York City Housing Authority buildings damaged, only one rebuild has been completed.

“People are houseless and displaced now,” Novack said. “We are lackadaisical in how we respond to that.”

The center’s report came as the nation this year has experienced six weather events with losses topping $1 billion. With hurricane season entering full swing, losses are expected to increase.

“This is a now problem, and it is a problem that is going to be worse in the future,” Novack said.

Despite the urgency expressed in the report, the Federal Emergency Management Agency is still struggling with employee vacancies. FEMA officials said in June that less than 25% of its disaster workforce is ready and available to respond (Climatewire, June 13). The agency is also lacking a formal administrator, an issue that Ortiz said was concerning.

“It is critical that these communities have agencies that are fully equipped to deal with these problems,” he said.

Ortiz said climate change will disproportionately affect the most vulnerable. By drawing attention to this issue, he said more officials can prepare, make investments and make better decisions.

“This is about protecting lives,” he said. “It is about protecting public health.”

Source: scientificamerican

Federal Government Announces $75M for Affordable Housing in B.C.

The federal government will invest $75 million to fund 1,500 affordable housing units in B.C.

The funding, to be made available over the next five years starting this month, will fund construction of 1,000 supportive housing units and 500 units for women and children.

In making the announcement Tuesday in Victoria, Jean-Yves Duclos, federal minister of Families Children and Social Development, said B.C. is facing a housing crisis that threatens the ability of vulnerable Canadians to feel secure. Duclos said the funds should start flowing relatively quickly

B.C. NDP MLA Spencer Chandra Herbert, who was representing the province at the announcement, said the funds will go to support affordable housing the province is building.

“So what this does is unlock additional dollars to build more homes on top of what we are already building,” he said.

Chandra Herbert said in the last two years the province has built or is currently building 21,000 affordable housing units as part of its $6.6-billion Homes for B.C. housing program. The intention is to build 114,000 affordable units by 2028.

It is unclear where the extra units, fueled by the $75 million investment, will be built.

Chandra Herbert said that will depend on which projects apply to access the funds. “It’s a first-come, first-served basis,” he said.

Victoria Mayor Lisa Helps said she hopes some of that funding will find its way to projects in Greater Victoria.

“It’s fantastic to see the federal government investing more money into B.C. The need is great,” she said. “The CRD housing needs assessment shows that by 2038 we will need 34,000 rental units in the region, a vast portion of those are for people on fixed incomes, including women fleeing violence and people coming off the street who need support to get their lives back together.”

She said this kind of money could go a long way to helping the hidden numbers of vulnerable people who are one or two turns of bad luck away from finding themselves on the street.

Duclos said the federal government, which is in the midst of its 10-year, $55-billion national housing strategy, made a point of ear-marking at least a third of that program for the most vulnerable.


“With investments like this one we recognize women and children face unique barriers to housing,” he said, noting they are more likely to be low income, work part-time, have caregiving responsibilities and may be dependent on a partner.

“This [investment] gets us closer to our goal to ensure at least one-third of the national housing strategy investment dollars will be supportive of the unique needs of women and their children and closer to our goal of reducing chronic homelessness by 50 per cent,” he said.

Makenna Rielly, executive director of the Victoria Women’s Transition House, said she was thrilled to hear the federal government is providing more money, but she warned the province still has a problem. “There is so much need. There are so many remote places in the province not being served, where people don’t have enough options.

“We have to realistic about how much more is needed.”

Rielly said services for women and vulnerable women and children in B.C. have lagged behind other provinces and in many cases are chronically underfunded. She said they had a “yahoo moment” in 2018 when the province announced $734 million over 10 years to support women and children fleeing violence and abuse.

Rielly said their 18-bed facility, like others around B.C., is almost always full and still there’s an unknown number of women and children hidden from the system sleeping on friends’ couches and in basements, avoiding abuse and violence in their own homes.

She said she hopes the new funding will go to more projects such as the one they are working on — a partnership with B.C. Housing, funded by the 2018 money — to establish transitional housing and programming for women on the West Shore.

“To break the cycle, families need to have safe and secure shelter, counselling and most importantly a home,” she said.

Chandra Herbert said the government understands transition housing for women in need is at a premium in B.C. “It’s hard to get a bed,” he said, adding that can mean some vulnerable women are forced to leave a transition house too soon, or stay in an abusive situation longer because the alternative is homelessness.

Source: timescolonist

Dubai Named World’s Third Most Affordable City for Prime Property

Dubai has been rated the third most affordable city in the world for purchasing prime residential property.

The emirate is behind Cape Town and Kuala Lumpur, according to the Savills World Cities Prime Residential Index for the first half of 2019.

While in-house Savills research into prime residential rental yields, highlight Dubai as the fourth best global hub for returns on investment (4.6 percent).

The report reveals prime prices in Dubai have fallen almost 20 percent in the last five years, due to high levels of new build stock and global economic uncertainty. In the last six months, prices fell by 1.9 percent.

According to the figures, the average price per sq ft of a prime residential property in Dubai is $600. This compares to $330 per sq ft in Cape Town and $260 per sq ft in Kuala Lumpar.

Swapnil Pillai, associate, research Middle East, Savills, said: “It is a good opportunity for domestic and foreign investors to look at Dubai. Firstly, because the time is right as it is far more affordable to purchase prime residential property now due to lower transactional costs and overall lower prices when compared to other major cities. Investors are paying less for top class specifications. Secondly, strong rental yields mean that long-term investors could generate robust annual returns when letting out property in the city.”

“It is transparent that capital values in Dubai have not grown at the same rate as other global destinations over the past 10 years [decreased by 1.7 percent], but that is not to say that the next 10 years will mirror this.

“In Dubai, demand is still strong; however, a mismatch of supply and demand has compressed prices. As supply/demand balances out over time, prices will adjust accordingly, so investment towards the bottom of the cycle could be a shrewd move.”

At the upper end of the scale, the most expensive property is Hong Kong ($4,730 per sq ft), which saw growth of 1.3 percent in H1; and New York ($2,520 per sq ft), despite witnessing a decline of 1.8 percent.

Prices in London, a popular investment hub for Middle East investors, dropped by 1 percent since the start of the year.

Savills World Cities Prime Residential Index – capital values price per square foot and price movements in local currency – cities ranked by half year growth

Source: arabianbusiness

Affordable Housing Challenges in Japan and Lessons Learnt From Europe

An interview with Kenji Hamamoto, Deputy Director at the Housing bureau of the Japanese Ministry for Land, Infrastructure, Transport & Tourism

Japan seems to be in a transitional period concerning its housing market. The increasing number of vacant homes and the need for a “safety net” for vulnerable citizens are posing demanding challenges to the authorities. A delegation from the Housing Bureau at the Ministry of Land, Infrastructure, Transport and Tourism (MLIT) visited Brussels last week to draw some inspiration from the way public, cooperative and social housing providers operate in Europe. As a follow up to a very interesting meeting between the delegation and Housing Europe Secretary General and Research Coordinator, Sorcha Edwards and Alice Pittini, we interviewed Mr. Kenji Hamamoto, Deputy Director at the Housing Bureau of the Ministry to know more about the housing reality in Japan.


Housing is considered to be in Japan “the indispensable base for citizens’ healthy and cultural lives”, as described in the Basic Act for Housing (Act No. 61 of June 8, 2006). The act also states that the government’s mission is to ensure provision, construction, improvement and management of good quality housing for citizens, now and in the future. It is also worth noting that housing is one of the main pillars of the national and regional economy: housing investment accounts for about 3% of Japan’s GDP.

How does the housing system work in the country?

Japan has a vigorous housing market. Typical choices for new families, for example, include ordering their house construction to manufacturers, purchase a pre-built house or a room of a condominium, or rent a room from a private landlord. In 2017, the construction of 965,000 new units has started.

As far as Social Housing is concerned, we have approximately 2.2 million units of Publicly-Operated Housing as of 2014. Publicly-Operated Housing is constructed and managed by local governments, with a subsidy from the national government. They account for 4% of the total housing stock in Japan.


What are the main housing challenges in Japan at the moment?

One notable challenge is the abundance of “vacant homes”, which refers to vacant or unused homes. Since a government survey in 2013 revealed that more than 8.2 million housing units stand unusedacross the country, the issue has been attracting nationwide attention. Among them, some 3.2 million are neither apartments listed for rental use nor secondary houses, which means they are already abandoned or could be in the near future, leading to negative impacts on neighborhoods and regions. MLIT is now working closely with local governments to encourage owners of such houses or stakeholders to either demolish abandoned homes, renovate and sell them to new residents, or convert them to commercial or community facilities.

Another recent development is the rising need to widen the housing safety-net for the vulnerable citizens. Many elderly people living on their own, or younger generation with stagnant paychecks now desperately need assistance in finding an apartment. An amendment of the law that came into force last year encourages local governments, NGOs and other relevant organizations to collaborate for providing such assistance.

What are the main housing-related policy priorities today?

In addition to working on the “vacant homes” issue and putting together the “safety net” new programs, we are trying hard to invigorate the existing, “second hand”, housing market. The mainstream of Japan’s housing market still lies on newly-constructed houses. As of 2013, existing house transactions account for merely 15% of all the transactions, considerably lower than in other developed countries.

We now see the signs of change, however. Homebuyers are increasingly choosing to buy second-hand homes, especially in the case of condominiums, than before. MLIT aims to accelerate the trend by helping establish a healthy market, where the existing houses of good quality would be evaluated and recognized accordingly.

What are the key partners of the Ministry?

For social housing schemes, our closest partners are local governments, i.e. prefectures and cities/towns. We are reaching out for more collaboration to local communities and NGOs, in partnership with the Welfare and Labor Ministry of the central government, which is in charge of assistance programs for those in need.

With regards to the broader housing policy in general, we work closely with the housing industry, which includes national and regional house manufacturers, condominium developers, operators of private rental apartments and architects. Among the national government ministries, we work with the Ministry of Economy, Trade and Industry, the Ministry of Environment and the Ministry of Forest and Fisheries, to name a few.

What are your takeaways or even sources of inspiration from your visit to Europe?

We learned a lot about the housing markets and systems, especially on social housing, and the policy framework in the EU and its member States from our meeting with Housing Europe. In particular, the fact that various entities such as cooperatives and non-profit organizations provide social/affordable housing in Europe was something new to us.

Last but not least, we really enjoyed our stay in Brussels, where you have efficient public transport, lots of parks and a thriving city center. I definitely wish to visit again, maybe in summer or in autumn!

Housing Europe welcomes the Japanese delegation in Brussels

Housing Europe Secretary General and Research Coordinator, Sorcha Edwards and Alice Pittini welcome the delegation from the Japanese Housing Bureau at the Ministry of Land, Infrastructure, Transport and Tourism. The first meeting that was held on Monday, 12 March on the premises of Housing Europe has been an open exchange concerning the housing policies in Europe as well as the various schemes that are implemented in the different Member States. Housing Europe had the chance to share the views of its members and the key facts and figures from the latest ‘State of Housing in the EU’ report but also to learn a lot from its guests about the housing reality in Japan.

Mr. Hamamoto also received an invitation for a Japanese participation to the next edition of the International Social Housing Festival that will take place in June 2019 in Lyon, France.

Housing Europe has also accompanied the Japanese Ministry delegation to a meeting with the European Commission Directorate General for Regional Development (DG Regio), where the EU Urban Agenda Housing Partnership and the role of cohesion funds was the focus of the discussion.

Source: housingeurope

How Much Affordable Housing is Too Much?

It’s a tough question to answer, but it’s one City Hall must get right as it weighs proposals that could either make Chicago more livable for many or stifle residential construction altogether.

Nervous Chicago business folks won a modicum of reassurance last month when a compromise work-notice ordinance finally was crafted. The deal admittedly had some aspects of a shotgun marriage, but business groups pulled enough concessions out of Mayor Lori Lightfoot that they ended up signing off on the new law.

Now, a much bigger test of business’s relationship with the new mayor has begun. At stake literally is the health of the city’s entire residential market, both rental and homeowner-occupied.

My reference is to a series of pending proposals to expand the city’s stock of affordable housing—or at least to prevent it from shrinking amid a central-area economic boom that’s sparking a gentrification wave. Get it right and lower-income people will get new options to stay in town without having to starve their kids. Get it wrong and both new and renovated residential construction will dry up.

The central proposal now on the table comes from aldermen headed by Near Southwest Side freshman Byron Sigcho-Lopez, 25th. Their plan would sharply ramp up the amount of affordable housing legally required in neighborhoods including downtown, mandating that as many as 30 percent of units in some structures be offered at well below market rates.

Sigcho-Lopez makes a compelling case that the city’s current Affordable Requirements Ordinance has been a bust, generating only 441 new units in the past decade and only 22 of them of the three-bedroom size. “We have a huge shortage of affordable housing,” he says. “We’re way behind what every other major city is doing.”

Sigcho-Lopez’s solution is to bump up from the current 10 percent to as much as 30 percent the share of a new building’s units that would have to be rented or sold at rates affordable to those who earn 30 to 80 percent of the Chicago-area median income. Also, half of those units would have to be built on-site, with the others within a half mile; current law says 25 percent on-site with the remainder within 2 miles.

Those numbers may be doable—under certain conditions. Related Midwest President Curt Bailey, who’s developing the huge 78 project in the South Loop, tells me that, in New York City, his firm operates a building that is able to charge the same rents as other nearby high-end structures even though 20 percent of its units are leased at affordable rates. That’s important, because it indicates that well-off folks and their poorer neighbors actually can live together in relative harmony.

Of course, Bailey’s company gets a nice property tax rebate in New York under that state’s 80/20 program. Sigcho-Lopez says he’s willing to talk about offering incentives, but his ordinance does not now do so.

The alderman also says he’s willing to talk about other, potentially even more controversial sections of his bill. Like extending the 30 percent set-aside requirement to condominium towers in the central area. Or including rehab of existing rental buildings if they have at least 10 units and at least $10,000 in work is occurring in each unit. By extending the new ARO rules to rehabs and new projects that need even routine zoning changes, the proposal is getting awfully close to being an across-the-board mandate—something that could be a market killer.

Lightfoot so far has been pretty quiet on where she’ll draw the line. During the campaign, she outlined proposals that are a milder version of Sigcho-Lopez’s and urged a big hike in the city’s real estate transfer tax to incentivize new affordable units.

The trick here is to find the right balance, says Geoff Smith, executive director of the housing institute at DePaul University. But by and large, all of the new, distinct high-end construction in the central area in recent years has been good for the city, he says. At the same time, he adds, most of the city’s current affordable units are in two- to four-flats that are not easily regulated.

Balance. Easy to say, but hard to achieve. I’ll be watching this issue with great interest.

Source: chicagobusiness


If a metropolitan area was to alter its system of permits and rules in a way that enabled a substantial expansion in the quantity of housing being built, would this step help to make housing more affordable for those with lower and moderate income levels?

Two answers are hypothetically possible here. One answer points out that new market-driven housing construction will tend to be higher-priced, and therefore that in it offers no near- or middle-term assistance to people struggling with housing affordability. The other answer readily admits that new market-driving housing construction will tend to be higher-priced, but argues that an overall rise in the quantity of housing supplied will affect prices across the entire housing market, not just one part of it.

The underlying question here is how “segmented” the housing market is. Is there a “migration chain” of housing so that as people move between housing of different prices levels, greater supply in one part of the housing market will affect other parts? Evan Mast discusses this question in “The Effect of New Market-Rate Housing Construction on the Low-Income Housing Market,” in the Employment Research newsletter from the W.E. Upjohn Institute (July 2019). The full working paper by the same name is also available at the Upjohn Institute website.


In one part of the study, he divides up neighborhoods into ten different income deciles. He shows that when people move from the lowest income decile, for example, the typical move is to a neighborhood in the second income decile; similarly, the typical move for those from a neighborhood in the second income decile is to a neighborhood in the third income decile. For people in the  seventh and eighth income deciles, the typical move was to remain in a neighborhood in the same income decile–but for these households, moving to a neighborhood with a lower income decile was more common than moving to a neighborhood with a higher income decile. Reshuffling across the housing market does happen.

In one part of his study, Mast offers a more detailed analysis. He writes:

I identify 686 large, new, market-rate multifamily buildings in 12 large central cities and track 52,000 of their current residents to their previous buildings of residence. I then find the tenants currently living in those buildings and track them to their previous residence, iterating for six rounds and, in order to focus on local connectivity, keeping only within-metro-area moves in each round.

He looks at the patterns of how much reshuffling is actually occurring in these cities, and then uses the results to set up a simulation model. Like all simulations, the devil is in the details, and research with other models would be useful. But Mast concludes:

The simulation results suggest that market-rate construction has an important effect on the middle- and low-income housing markets. In my baseline specification, 100 new market-rate units create 70 equivalent units in neighborhoods with household incomes below the metro area median, and 39 in neighborhoods with household incomes from the bottom fifth.


This should open these housing markets and lower prices, all else equal, though I do not directly estimate these implied effects. Notably, however, the simulation implies these equivalent units are created within five years of the completion of the new building.

A few thoughts here:

1) Affordable housing policy is often focused on the most immediate question of housing units that people can move into right now. But housing markets churn: that is, there is always a flow of people moving out of some areas and into others. The effects of new market-rate housing construction do spread out across an urban area.

2) The churning and movement within the housing market is real, but it takes a few years. In some urban areas where construction has been severely hindered over the years (and even decades) by local regulation, allowing more market-rate building is not a quick or immediate fix for affordable housing. This shouldn’t be a surprise. You can’t reasonably expect the effects of years (or decades) of hindering the supply of housing to disappear quickly. But if an urban area with an affordability problem doesn’t allow more market-rate building, it’s affordability problem is very likely to be worse a few year down the road.

3) Nothing said here rules out policies that would involve more direct housing assistance to low-income people, whether in the form of housing vouchers or zoning regulations that require developers to build a range of housing for different income levels. Such policies need to be evaluated on their own merits. But for a housing market experiencing an affordability problem,  these policies are not a substitute for the construction of more market-rate housing. You don’t have to be an economist to recognize that if supply of housing is restricted, but demand for housing keeps growing, the rising price of housing is going to become an issue.

Source: bbntimes

Six Housing Projects Receive $30M In Funding For 413 Affordable Units

Six affordable housing developers in Oakland were awarded a total of $30 million from the state to add new affordable housing units to serve low-income households in the city.

The funding will go toward the building of 413 units, 168 of which will provide permanent supportive housing for people experiencing homelessness, mental illness and substance abuse issues, the city announced Wednesday.

The six developments are being funded through California’s No Place Like Home Program and the Supportive Housing Multifamily Housing Program, as well as Oakland’s voter-approved Measure KK for affordable housing.

The 168 permanent supportive housing units will combine housing with supportive services such as case management, aid with physical disabilities, mental health assistance and support with daily life activities.

The projects will consist of a mix of new construction and rehabilitated buildings, and have varying completion dates from later this year through 2022.

The new residents of the buildings will be chosen through the Alameda County Coordinated Entry System to ensure the people with the greatest needs are accommodated in the properties.

“These housing developments are incredibly important for addressing the needs of our most vulnerable populations,” said Sara Bedford, the city’s Director of Human Services.

Bedford said it is critical to get more projects like this funded and operational to address the housing crisis in the region.

Source: sfgate

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