tag:theconversation.com,2011:/fr/topics/real-estate-1474/articlesReal estate – The Conversation2024-03-28T05:46:38Ztag:theconversation.com,2011:article/2148352024-03-28T05:46:38Z2024-03-28T05:46:38Z‘Property poetry’? Real estate ads and literature have more in common than you might think<p>A few years ago, I turned some <a href="https://www.powderkegmagazine.com/amelia-dale">real estate advertisements into poems</a> by adding line breaks:</p>
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<p>Fantastic views of the beach, ocean, <br>
headland and hinterland,<br>
you can see the Haven,<br>
you look straight up <br>
the green grass of the Skillion</p>
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<p>I was interested, among other things, in asking what happens when we compare the language of real estate copy with more obvious forms of poetry.</p>
<p>If you read a real estate ad with the same attention you might bestow on a poem you can observe how it deploys metre, metaphor, and the tropes of landscape poetry. You can note how some advertisements directly reference the sublime or the picturesque, and how others open with a rhyming couplet.</p>
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Read more:
<a href="https://theconversation.com/explainer-poetic-metre-53364">Explainer: poetic metre</a>
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<p>Australian poet Lucy Van characterises real estate copy as a form of poetry. No other poetry, she <a href="https://www.liminalmag.com/liminal-review-of-books/agent-of-the-year">observes</a>, </p>
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<p>is more familiar to the Australian reading audience, more widely read and better understood, not only for what is said but importantly for what is not said, than the 150-200 word copy that flogs real estate.</p>
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<p>Like other paid work involving some form of writing, real estate copywriting, or what Van calls “property poetry,” is a job that has attracted writers of literature. I know at least one Australian creative writer who has worked in this industry.</p>
<p>Courses on writing real estate advertisements are run by the <a href="https://www.writerscentre.com.au/store/courses/real-estate-copywriting/">Australian Writers’ Centre</a>: pitched at “a writer with a passion for property or an agent looking to hone your ad writing skills.” A key learning outcome of such a course is developing the ability to “add value,” or push up the price of the property through your description of it.</p>
<p>The literary nature of real estate copy raises several larger questions. What is the relationship between writing and ownership of land? What is the history of writers “adding value” to landed property? How does literature normalise and respond to the inequities of private property in Australia?</p>
<h2>19th-century real estate copy</h2>
<p>The history of people comparing the language of real estate to poetry is at least as old as the boom in property auctions and real estate advertisements that occurred in early 19th-century England.</p>
<p>Newspapers frequently joked about the poetic language used in real estate auctions and ads. They consistently, if facetiously, described the prominent real estate auctioneer, George Robins, as a landscape poet, on par with William Wordsworth.</p>
<p>Poets of the period were also aware of the proximities between their writing and that of the burgeoning real estate industry. In his long, rambling poem Don Juan, Lord Byron compares himself to an auctioneer. This is after his lengthy description of a Gothic Abbey:</p>
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<p>An old, old monastery once, and now <br>
Still older mansion, of a rich and rare <br>
Mix’d Gothic, such as artists all allow <br>
Few specimens yet left us can compare.<br></p>
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<p>Fittingly, Byron’s lines were taken up by his acquaintance, the auctioneer Robins, who quoted them in ads for the sale of an abbey in <a href="https://www.tandfonline.com/doi/abs/10.1080/10509585.2016.1235824">The Times in 1846</a>.</p>
<p>Descriptive poems oriented around a house and property are, of course, older than real estate copy. An obvious example in English literature is the 17th-century Country House poem, which praises the country house owner through praising their property.</p>
<p>But these poems are not about houses or estates on the market. In England up until the 19th century, a real estate industry did not exist. Laws and cultural norms meant the family estate was typically passed down as an undivided parcel of land from one male heir to the next, rather than sold. </p>
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<p>These laws – and their exclusion of women and younger sons of landowning families – motivate the plots of most of Jane Austen’s novels. </p>
<p>They are why, in Sense and Sensibility, Marianne and Elinor Dashwood must leave the house they grew up in when their father dies, and become dependent on the charity of their relatives. Similarly in Pride and Prejudice, Mr Bennet’s house and land – since he only has daughters – will go to Mr Collins upon his death. </p>
<p>Laws of primogeniture kept land ownership in the hands of a small, privileged and overwhelmingly male group. They also concentrated political power in that same class. Owning land brought with it political rights, such as the right to vote.</p>
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Read more:
<a href="https://theconversation.com/friday-essay-the-revolutionary-vision-of-jane-austen-71000">Friday essay: the revolutionary vision of Jane Austen</a>
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<h2>Real estate and the colony</h2>
<p>The more contemporary attitude towards land as a commodity (something that only comes up in Austen’s later work, especially her final, unfinished novel, <a href="https://www.goodreads.com/book/show/166177.Sanditon?from_search=true&from_srp=true&qid=qZgoXYkuez&rank=2">Sanditon</a>) is inextricable from the history of colonialism. </p>
<p>In the British colonies, property law, rather than privileging an ancestral chain of ownership, was developed to dispossess First Nations people as efficiently as possible. Laws and customs were then exported elsewhere, including to imperial centres. As the Australian poets <a href="https://journals.sagepub.com/doi/full/10.1177/03063968221098623#bibr1-03063968221098623">Astrid Lorange and Andrew Brooks</a> have put it, </p>
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<p>[t]he “vacant” land of the settler colony provided the conditions for modern property laws to be written and enacted.</p>
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<p><a href="https://theconversation.com/pastoral-ponderings-and-settler-politics-how-a-colonial-judge-and-poet-wrote-terra-nullius-into-law-199962">Thomas H. Ford and Justin Clemens have shown</a> how the Australian judge, Romantic poet, and Wordsworth acolyte, Barron Field, in both his legal rulings and his poetry, established the foundations for <em>terra nullius</em>: the notion that Australia was an empty, unowned land. </p>
<p>Field’s sweeping nullification of First Nation sovereignty in his poetry and his judgements rendered the country as one without history. Australia could be an Enlightenment blank space for colonial experiments structured around a land market. </p>
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Read more:
<a href="https://theconversation.com/pastoral-ponderings-and-settler-politics-how-a-colonial-judge-and-poet-wrote-terra-nullius-into-law-199962">Pastoral ponderings and settler politics: how a colonial judge and poet wrote terra nullius into law</a>
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<p>For example, the establishment of South Australia was heavily influenced by the theories of author <a href="https://adb.anu.edu.au/biography/wakefield-edward-gibbon-2763">Edward Gibbon Wakefield</a>, who argued for establishing a colony funded through land sales to settlers. <a href="https://adb.anu.edu.au/biography/torrens-sir-robert-richard-4739">Richard Robert Torrens</a>, parliamentarian and briefly Premier of South Australia, further refined the settler property regime through <a href="https://dti.sa.gov.au/history-of-the-torrens-system">the Torrens system</a>, which offered a simple and effective way to establish title to land and erased First Nations’ ownership. Torrens Title quickly became standard throughout the British empire.</p>
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<p>Writer and theorist Aileen Moreton-Robinson, in her book, <a href="https://www.google.com.au/books/edition/The_White_Possessive/VTB0DwAAQBAJ?hl=en">The White Possessive: Property, Power, and Indigenous Sovereignty</a>, places real estate at the heart of contemporary white Australian settler consciousness. For Moreton-Robinson, Australian national identity “is built on the disavowal of Indigenous sovereignty because the nation is socially and culturally constructed as a white possession”. </p>
<p>Moreton-Robinson notes that the settler reaction to <a href="https://aiatsis.gov.au/explore/mabo-case">the 1992 Mabo decision</a> granting native title was a “discourse of loss” and fear of “dispossession” ultimately “orchestrated to recenter white possession of the nation.” </p>
<p>More recently, in the Voice referendum, part of the “No” campaign presented the Voice as a conspiracy to seize privately owned property. The successful “No” campaign thrived from the inherent contradiction between Indigenous sovereignty and settler ownership of stolen land.</p>
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Read more:
<a href="https://theconversation.com/no-the-voice-to-parliament-would-not-force-people-to-give-up-their-private-land-212784">No, the Voice to Parliament would not force people to give up their private land</a>
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<h2>Critiquing our real estate obsession</h2>
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<p>Kate Holden’s recent nonfiction book, <a href="https://www.blackincbooks.com.au/books/winter-road">The Winter Road: A Story of Legacy, Land and a Killing at Croppa Creek</a>, centres on the well-publicised murder by elderly farmer Ian Turnbull of an environmental protection officer, Glen Turner. For Holden, Turner’s murder, and the sympathy Turnbull subsequently won from the public, cannot be isolated from the living legacy of invasion and colonisation. </p>
<p>Holden connects Turnbull’s persistence in illegally clearing vast tracts of koala habitat, and his murder of Turner, to British Enlightenment theories of property. The English philosopher <a href="https://plato.stanford.edu/entries/locke/">John Locke</a>, she observes, “placed emphasis on labour to morally justify the owning of property. The more work put into the land, the more settled a man was upon it.” </p>
<p>Holden traces associations between Locke’s ideas, the history of <em>terra nullius</em> and the “strange, morbid fixation in Australian myth of just how hard a person has to work on this land.” She writes, </p>
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<p>[b]y the time of Australia’s settling, the ineluctable mark of a British citizen was land ownership. It enfranchised him, gave him rights […] Land – elemental, foundational – was the desperately prized asset in a new colony. Without it, man was only an object.</p>
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<p>Successive governments and polls acknowledge that home ownership continues to be an “aspiration” of an overwhelming majority of Australians, even if it is out of reach to an increasing proportion of the population.</p>
<p>Yet the contradictions and inequities surrounding the trade in stolen land are rehearsed largely without reflection or analysis across contemporary Australian culture. </p>
<p>TV series like <a href="https://www.imdb.com/title/tt14344354/">Luxe Listings Sydney</a> (where million-dollar ocean view mansions are sold to a tiny, cashed-up clientele), The Block, and Escape from the City, participate in a nation-wide settler obsession with real estate. </p>
<p>“We love house hunting. We hate house hunting,” <a href="https://www.liminalmag.com/liminal-review-of-books/lucy-van">writes Van</a>.</p>
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Read more:
<a href="https://theconversation.com/i-dont-want-realism-i-want-magic-behind-the-fantasy-fuelling-our-real-estate-voyeurism-164708">'I don’t want realism. I want magic': behind the fantasy fuelling our real estate voyeurism</a>
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<p>Michelle de Kretser’s recent novel <a href="https://www.goodreads.com/book/show/59432505-scary-monsters?from_search=true&from_srp=true&qid=Szwj6CgXVc&rank=1">Scary Monsters</a>, like Van’s essays, takes a more critical approach to real estate culture.</p>
<p>An interest in property suffuses both halves of de Kretser’s bifurcated novel, particularly obvious in the “Lyle” section, set in a dystopic future not that different from the present. It begins with a “For Sale” sign, soon followed by interpolated real estate copy, that, in keeping with de Kretser’s novel is drily foreboding: </p>
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<p>Here is a house that can accommodate the joys and sorrows of your family.</p>
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<p>De Krester is nothing if not precise about how settler-colonial violence installs ownership of land at the heart of the Australian national imaginary. Lyle euthanizes his elderly mother so that he and his wife can downsize and relocate to “a luxury development”. Appropriately enough, it is in a repurposed abattoir, advertised as “an urban village in an emerging precinct where imagination, history and visionary architecture come together to create a whole new story”.</p>
<p>The emphasis on “new story” is deliberate. Settler real estate culture in de Kretser’s satire involves erasing history and speculating upon the future. Lyle’s migrant family abandons their heritage. Lyle dismisses Aboriginal people as </p>
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<p>a living reminder of the past. Who feels comfortable facing up to old mistakes? […] The whole point of Australia is a bet on the future.</p>
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<p>In Scary Monsters, real estate speculation is violently forward-looking, operating in direct contradiction with grappling with a history of dispossession. For Lyle, </p>
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<p>Real estate is another way to say Australia. Acquiring it, changing it, making a profit on it, in short, managing the property cycle with confidence – it’s the story of our nation.</p>
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<p>Amanda Lohrey, in her <a href="https://theconversation.com/why-are-we-obsessed-with-renovation-amanda-lohrey-explores-the-promise-and-limits-of-transforming-our-environment-211668">new novel The Conversion</a>, also explores the Australian obsession with buying and renovating homes, linking renovation to the practice of silencing a past. </p>
<p>Australian writing can dissect the way land is owned and the how the nation is imagined as a white possession. Yet literature can also help establish and perpetuate systems of private property. Meanwhile, the real estate industry continues to learn from literature new ways to rhetorically “add value” to properties.</p><img src="https://counter.theconversation.com/content/214835/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Amelia Dale does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Writers have long rhapsodised about real estate – or the difficulty acquiring it – but contemporary authors are asking awkward questions about the inequities of our property obsession.Amelia Dale, Lecturer in English, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2237302024-03-24T19:06:28Z2024-03-24T19:06:28ZCameron Murray’s ‘terrifically unfair’ answer to our housing woes resembles a lottery, not the serious reform we need<figure><img src="https://images.theconversation.com/files/583332/original/file-20240321-17-dna2ij.jpg?ixlib=rb-1.1.0&rect=5%2C0%2C3988%2C2250&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Pat Whelen/Unsplash</span></span></figcaption></figure><p>With <a href="https://www.abs.gov.au/statistics/people/housing/estimating-homelessness-census/latest-release">120,000 people homeless each night</a> and <a href="https://www.pc.gov.au/inquiries/completed/housing-homelessness/report/housing-homelessness.pdf">one in five low-income private renters</a> spending more than half their income on rent, it is clear Australia urgently needs a housing policy change. A new book by economist Cameron Murray, <a href="https://www.allenandunwin.com/browse/book/Cameron-K.-Murray-Great-Housing-Hijack-9781761470851">The Great Housing Hijack</a>, claims to provide a guide for just that. </p>
<p>Murray is spot on about one thing: the housing policy debate has been hijacked. As he notes, the breathless reporting of every fluctuation in the market is unenlightening. People with a stake in property markets flood the debate with spurious claims.</p>
<p>Unfortunately, Murray’s book only adds to the cacophony. His analysis is inconsistent with the evidence, and his proposed solution yet another distraction.</p>
<p>But we can’t give up in despair. It is important to sift critically through the research and advocate for what works. </p>
<hr>
<p><em>Review: The Great Housing Hijack – Cameron K. Murray (Allen & Unwin)</em></p>
<hr>
<p>The most controversial argument in The Great Housing Hijack is that planning and zoning rules do not change how much new housing is built, just the location: </p>
<blockquote>
<p>The planning system and its zoning rules do not regulate how fast new homes are built. There are no speed limits. What town plans do is regulate where different types of immobile buildings can go. </p>
</blockquote>
<p>Murray says developers will only ever build a limited number of homes at a time, regardless of planning permissiveness. He argues they will refrain from flooding the housing market. Instead, he says, they will often prefer to just hold on to land, keeping the option of developing it in future. </p>
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<p>This claim is based on shaky research. <a href="https://link.springer.com/article/10.1007/s11146-020-09815-z">Murray’s model assumes</a> individual land owners have pricing power: if they build too many homes at once, they will undercut their own prices. <a href="https://www.sciencedirect.com/science/article/abs/pii/S1051137720300449">His analysis uses data</a> on just eight developers, who built 9% of new homes over the period studied.</p>
<p>In fact, the construction sector is <a href="https://grattan.edu.au/wp-content/uploads/2017/12/895-Competition-in-Australia-Too-little-of-a-good-thing-.pdf">not highly concentrated</a> and the urban infill market has <a href="http://petertulip.com/misunderstandings.pdf">many players</a>, so each individual developer has little market power.</p>
<p>Murray’s model also assumes it makes sense for developers to hang on to empty land for a long time – in the hope, for example, that its value will increase if upzoned in the future. But that just suggests another benefit of zoning reform – taking away the prize for waiting – although Murray is right that <a href="https://grattan.edu.au/news/the-great-australian-nightmare/">taxing the windfall gains from upzoning is a good idea</a>.</p>
<p>Ultimately, the weight of <a href="https://grattan.edu.au/report/housing-affordability-re-imagining-the-australian-dream/">evidence</a> suggests planning and zoning do matter for housing supply. They influence how quickly the supply of new homes can respond to changes in incomes and preferences. <a href="https://www.productivity.nsw.gov.au/sites/default/files/2023-12/202305_02-building-more-homes-where-people-want-to-live.pdf">Rents are lower</a> when housing supply is more responsive.</p>
<p>The location – not just the quantity – of housing is also important. When planning and zoning rules force us into urban sprawl, our cities are <a href="https://www.productivity.nsw.gov.au/sites/default/files/2024-02/What-we-gain-by-building-more-homes-in-the-right-places.pdf">less vibrant and productive</a>.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/the-yimby-movement-is-spreading-around-the-world-what-does-it-mean-for-australias-housing-crisis-219313">The YIMBY movement is spreading around the world. What does it mean for Australia's housing crisis?</a>
</strong>
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</p>
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<h2>Supply is crucial</h2>
<p>Murray argues that even if more housing were built, the average household would not end up spending any less on housing:</p>
<blockquote>
<p>aliens could suddenly and immediately construct a million extra homes in Australia, or about 10 per cent more [than] at present, and within a few years rental prices would still be on average 20 per cent of household income.</p>
</blockquote>
<p>This implies that if Australians could suddenly access cheaper housing, they would spend all the income freed up on even better housing. But <a href="https://link.springer.com/article/10.1007/s00181-016-1095-3">the evidence suggests</a> demand for housing is fairly inelastic, meaning the effect of price reductions is unlikely to be completely offset by an insatiable desire for more housing.</p>
<p>Moreover, Murray’s focus on average rent-to-income ratios ignores the ways boosting supply makes Australians – especially lower-income renters – better off.</p>
<p>If housing becomes cheaper, many people will stay where they are and spend the extra money on other goods. That is pretty important, when too many households are choosing between <a href="https://reports.foodbank.org.au/wp-content/uploads/2023/10/2023_Foodbank_Hunger_Report_IPSOS-Report.pdf">rent and food</a>.</p>
<p>Others will use the opportunity to move to better, safer homes. <a href="https://www.pc.gov.au/inquiries/completed/housing-homelessness/report/housing-homelessness.pdf">15% of private renters</a> live in homes with major structural problems. The rate is <a href="https://www.pc.gov.au/research/completed/renters/private-renters.pdf">even higher</a> for single parents and people with disabilities.</p>
<p>If I was living in a mouldy room in a decrepit share house, then after a supply boost was able to move to a smart one-bedroom apartment for the same price, I would be better off, even if I was still spending 20% of my income on rent.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/urbanisation-and-tax-have-driven-the-housing-crisis-its-hard-to-see-a-way-back-but-covid-provides-an-important-lesson-223548">Urbanisation and tax have driven the housing crisis. It's hard to see a way back but COVID provides an important lesson</a>
</strong>
</em>
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<hr>
<h2>How do we escape the policy quagmire?</h2>
<p>Murray proposes bypassing the private market altogether with a scheme called HouseMate. The federal government would buy or repurpose land, build homes, then sell them at a discounted price to Australians who do not own property. </p>
<p>The sale price would cover only the construction cost, not the cost of land, so it would provide a big subsidy for the people lucky enough to be chosen. Buyers would get to enjoy living in a discounted home, and could resell (to others eligible for HouseMate) after five years of ownership, pocketing most of the gains. But the catch is, there would only be a limited number of places available each year.</p>
<p>To build the homes, Murray suggests the government could compulsorily acquire sites, but that is not likely to fly at scale.</p>
<p>The government would probably end up buying most of the land at market rates. <a href="https://osf.io/nxq2u/download">Murray estimates</a> that it would cost the federal budget about A$3 billion to provide 30,000 places each year, although the government may eventually recoup some of that cost by taking a share of the capital gains from resales, and lending to participating buyers, as Murray also proposes.</p>
<p>Another use for that money might be boosting Commonwealth Rent Assistance: $3 billion a year would be enough to increase the maximum payment by at least 50%. </p>
<p>Rent Assistance is targeted to the most vulnerable renters. It is available to everyone who is renting and receiving an eligible income support payment. About 900,000 households currently receiving the maximum rate would benefit from an increase of <a href="https://grattan.edu.au/news/slow-migration-to-help-renters/">up to $2,500 a year</a>, helping to compensate for the hit rising rents have made to their household budgets.</p>
<p>In contrast, the only eligibility criteria for Murray’s HouseMate would be age; there would be no means testing. Anyone who did not own property would be mad not to apply. With a limited number of places each year, getting picked for HouseMate would be like winning the lottery – and indeed Murray floats the idea that “queuing could be managed using lotteries”.</p>
<p>This is a terrifically unfair way to distribute housing help: someone earning $250,000 a year would have the same chance of winning as someone earning less than $50,000. Many people struggling to afford housing would miss out altogether. </p>
<p>There is a reason governments don’t usually model welfare programs on PowerBall.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/the-help-to-buy-scheme-will-help-but-wont-solve-the-housing-crisis-224956">The Help to Buy scheme will help but won't solve the housing crisis</a>
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<h2>We already know what governments need to do</h2>
<p>We do not need grand lotteries with catchy names in housing policy. Despite the distractions and debates, we already know what needs to change. The good news is that governments have started down the right path.</p>
<p>The federal government <a href="https://www.afr.com/policy/economy/labor-lifts-rent-assistance-by-15pc-20230505-p5d62f">increased Commonwealth Rent Assistance by 15%</a> in 2023. It has established the <a href="https://www.housingaustralia.gov.au/housing-australia-future-fund-facility-and-national-housing-accord-facility">$10 billion Housing Australia Future Fund</a> to fund 30,000 new social and affordable homes in the next five years. These are big steps in the right direction, although there is <a href="https://grattan.edu.au/news/2024-year-of-the-renter/">still much work to do.</a></p>
<p>The federal government has also put <a href="https://treasury.gov.au/housing-policy/accord">$3.5 billion</a> on the table to encourage the states to reform land-use planning rules to get more homes built, <a href="https://grattan.edu.au/news/national-cabinets-new-housing-plan-could-fix-our-rental-crisis/">the only real long-term fix to our housing woes</a>.</p>
<p>State governments, <a href="https://www.planning.nsw.gov.au/news/new-planning-rules-fast-track-low-and-mid-rise-housing">especially in New South Wales</a>, are starting to take action to relax land‑use planning rules and get more housing built.</p>
<p>What governments need to do now is follow through on what we know will work, not throw out the evidence book. Let’s not give in to the din.</p><img src="https://counter.theconversation.com/content/223730/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The Grattan Institute began with contributions the Federal and Victorian Governments, BHP Billiton, and NAB. In order to safeguard its independence, Grattan Institute’s board controls this endowment. Grattan Institute also receives funding from corporates, foundations, and individuals to support its general activities as disclosed on its website.</span></em></p><p class="fine-print"><em><span>Brendan Coates does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Governments need to follow through on what we know will work, not give in to the housing policy din.Elizabeth Baldwin, Associate researcher, Grattan InstituteBrendan Coates, Program Director, Economic Policy, Grattan InstituteLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2254462024-03-18T19:21:22Z2024-03-18T19:21:22ZWhat’s the best way to ease rents and improve housing affordability? We modelled 4 of the government’s biggest programs<p><em>This article is part of The Conversation’s series examining the housing crisis. Read the other articles in the series <a href="https://theconversation.com/au/topics/housing-series-2024-153769">here</a>.</em></p>
<hr>
<p>Australian state and federal governments spend money in many ways to ease rental stress and get more Australians into home ownership. Four of the most prominent are:</p>
<ul>
<li><p><a href="https://firsthome.gov.au/">first homeowner grants</a></p></li>
<li><p><a href="https://unohomeloans.com.au/articles/shared-equity-schemes">shared equity schemes</a></p></li>
<li><p><a href="https://www.revenue.nsw.gov.au/taxes-duties-levies-royalties/transfer-duty/first-home-buyers">first homeowner stamp duty exemptions</a></p></li>
<li><p><a href="https://www.dss.gov.au/housing-support/programmes-services/commonwealth-rent-assistance">rent assistance</a>.</p></li>
</ul>
<p>Our team at Victoria University’s Centre of Policy Studies has modelled the economic impact of each of them in a way that allows their outcomes to be <a href="https://www.copsmodels.com/ftp/workpapr/g-344.pdf">compared</a>.</p>
<p>The bad news is that we’ve found none of the four can simultaneously lift affordability for renters, lift affordability for owners, get more Australians into home ownership, and boost economic efficiency.</p>
<p>The good news is we’ve found a mix that could work well.</p>
<p>We used Victoria University’s regional economic model to compare the effect of spending an extra A$500 million on the variant of each of the programs presently available in Victoria.</p>
<p>To better assess the economic impact, we assumed the extra $500 million was paid for by an increase in taxation.</p>
<h2>Grants and shared equity</h2>
<p>We found first homeowner grants improve affordability for owners, slightly improve affordability for renters, and slightly increase home ownership rates, but come with a heavy economic cost.</p>
<p>The cost to <a href="https://www.investopedia.com/terms/e/economic_efficiency.asp">economic efficiency</a> amounts to about 20 cents for every dollar spent. Economic efficiency measures the extent to which inputs such as labour, land and capital are allocated to their most valuable uses.</p>
<p>Importantly, that 20 cents in the dollar cost is the economic cost of the spending, not the cost of raising the revenue to fund it.</p>
<p>With the average economic cost of state government taxation in the vicinity of <a href="https://www.copsmodels.com/ftp/workpapr/g-289.pdf">30 cents</a> per dollar raised, that means every extra dollar raised to be spent on a first home buyer grant has an economic cost of about 50 cents, making it an economically expensive way to get people into homes.</p>
<p>Shared equity schemes in which the government part-owns a home with a buyer have similar costs, but are better at getting people into their own homes.</p>
<h2>Stamp duty discounts</h2>
<p>Our modelling finds that stamp duty discounts for first home buyers have an economic benefit. This is because stamp duty is an extraordinarily inefficient tax that makes it <a href="https://theconversation.com/swapping-stamp-duty-for-land-tax-would-push-down-house-prices-but-push-up-apartment-prices-new-modelling-finds-184381">harder for people to move</a>.</p>
<p>Unfortunately, the model also finds stamp duty discounts will make home ownership even less affordable by pushing up property prices, and make it only slightly easier for the first home owners able to get the discounts. </p>
<h2>Rent assistance</h2>
<p>Rent assistance is delivered by the Commonwealth rather than states to Australians in receipt of Commonwealth benefits. </p>
<p>Our study finds its economic costs are low, just 5 cents for every dollar spent, meaning that raising extra tax and spending it on rent assistance should have a total economic cost of about 35 cents for each dollar raised and spent.</p>
<p>We find it has a significant effect in making rent more affordable, but causes home ownership rates to fall, because it tips the balance for financially strained households in favour of renting rather than buying.</p>
<h2>What works best</h2>
<p>If making shelter more affordable for low-income earners is the number one priority, by far the best way to do it is to boost rent assistance.</p>
<p>While the benefits come at the expense of home ownership, for the renters receiving them, they are worth having.</p>
<p>But rent assistance is federally administered. For a state government, the best way to help both owners and renters at the lowest economic cost appears to be a mix of two thirds first home buyer grants and one third stamp duty discounts. </p>
<p>Our modelling suggests such a blend would have a negligible impact on economic efficiency and home affordability, while allowing more owners to rent and, as a result, make renting more affordable. </p>
<p>However, it would be costly. From a national perspective, the same improvement in rental affordability could be achieved for less than one-tenth the financial cost if the Commonwealth were to fund additional rent assistance.</p>
<p>If nothing else, our modelling proves these decisions are difficult.</p>
<p>No single tool is perfect, but using the right mix of them can help – all the more so if the states and Commonwealth can work together. Our estimates can help.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/the-help-to-buy-scheme-will-help-but-wont-solve-the-housing-crisis-224956">The Help to Buy scheme will help but won't solve the housing crisis</a>
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<img src="https://counter.theconversation.com/content/225446/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>For the Commonwealth, the best measure is rent assistance. For the states, it’s a mix of two-thirds first homebuyer grants and one-third stamp duty discounts.Jason Nassios, Associate Professor, Centre of Policy Studies, Victoria UniversityJames Giesecke, Professor, Centre of Policy Studies and the Impact Project, Victoria UniversityXianglong Locky Liu, Research fellow, Victoria UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2249022024-03-07T22:03:41Z2024-03-07T22:03:41ZFlood risk mapping is a public good, so why the public resistance in Canada? Lessons from Nova Scotia<p>Flood risk maps are an essential public good. Indeed, many countries like the <a href="https://flood-map-for-planning.service.gov.uk/">United Kingdom already offer flood risk mapping</a>.</p>
<p>Canada committed to a public flood risk mapping portal in the <a href="https://www.budget.canada.ca/2023/report-rapport/chap4-en.html#Raising%20Awareness%20of%20Flood%20Risks">2023 budget</a>. However, despite the <a href="https://www.theweathernetwork.com/en/news/climate/impacts/climate-water-is-the-new-fire">increasing frequency and impact of large, catastrophic floods</a>, we still have a sparse patchwork of flood risk maps at municipal and provincial scale. </p>
<p>What <a href="https://floodsmartcanada.ca/floodplain-maps/">flood mapping that does exist</a> is hard to find, of uncertain quality and currency, and often <a href="https://globalnews.ca/news/5206284/bad-flood-map-canada/">difficult for non-experts to understand and apply</a>. </p>
<p>The unacknowledged reason why there is a lack of flood risk mapping in Canada is because such maps generally face public resistance. Indeed, it is not uncommon in Canada to see flood or wetland mapping <a href="https://montreal.ctvnews.ca/quebec-withdraws-30-municipalities-from-contested-flood-zone-maps-1.4509236">withdrawn or modified</a> because of public pressure. </p>
<p>I led two survey-based studies recently with former graduate student Samantha Howard and post-doctoral fellow Brooke McWherter to understand how people in flood-prone areas of Nova Scotia perceive publicly available flood maps. We found wide agreement about the benefits of such maps — until we asked about the <a href="https://www.intactcentreclimateadaptation.ca/treading-water-impact-of-catastrophic-flooding-on-canadas-housing-market/">impact on real estate value</a>. </p>
<h2>The case of Nova Scotia</h2>
<p>Nova Scotia faces some of the <a href="https://changingclimate.ca/CCCR2019/chapter/8-0/">highest sea level rise in Canada</a> under current climate change projections. Yet last week, the Nova Scotia government <a href="https://www.cbc.ca/news/canada/nova-scotia/coastal-protection-act-environment-tim-halman-climate-change-1.7125745">decided not to proceed with the long-awaited Coastal Protection Act (CPA)</a>, which had been passed with all-party assent in 2019. </p>
<p>Among other things, the act would have regulated how close people could build to the ocean based on assessments of sea level, storm projections and information about the elevation and erosion risk of each section of coast. This would have protected people and infrastructure, as well as sensitive coastal ecosystems, and left space for ocean dynamics. </p>
<p>In lieu of the act, the Nova Scotia government released a <a href="https://novascotia.ca/coastal-climate-change/">new website</a> featuring resources to help individual coastal property owners make decisions about their bit of coastline, <a href="https://www.cbc.ca/news/canada/nova-scotia/municipalities-nova-scotia-coastal-protection-act-1.7021006">leaving dozens of rural coastal municipalities</a> in the lurch. One of those resources was a new <a href="https://nsgi.novascotia.ca/chm">coastal hazard map</a>. </p>
<p>The lengthy disclaimer you need to agree to before you can access the map immediately erodes its trustworthiness. Moreover, while people may trust any good news they see in its data, they may still be at risk due to the tool’s many data and design flaws. To supplement this tool, Nova Scotia has <a href="https://globalnews.ca/news/10317417/new-coastal-protection-plan-nova-scotia/">committed to finishing detailed flood line mapping by 2027</a>. </p>
<p>It is too soon to know how people are responding to this tool, but we know it does not take a lot of unhappy constituents to make a government nervous, especially if those constituents hold financial or political power. <a href="https://www.cbc.ca/news/canada/nova-scotia/coastal-protection-act-tim-halman-environment-climate-change-1.6959599">The public engagement associated with the CPA was, after all, overwhelmingly in support of proclaiming and regulating under the act</a>. Yet here we are. </p>
<h2>Drivers of resistance</h2>
<p>The first survey we ran in 2021 — through an online link sent via Canada Post to all residents in two towns in Southwestern Nova Scotia — showed <a href="https://doi.org/10.1111/cag.12836">one in six people felt flood risk mapping presented too big a risk for real estate value</a>. Our second survey of about 1100 house residents around the Minas Basin, Nova Scotia, in 2022 found that <a href="http://hdl.handle.net/10222/83004">one in three residents expressed concern about real estate value</a>. Both studies had a margin of error of plus or minus 6 per cent at a 95 per cent confidence level.</p>
<p>The first survey had a smaller response rate but represented the population demographics better. The second was biased toward older respondents and those with higher incomes. </p>
<p>Moving back to our original question — why doesn’t everyone see flood risk mapping as a public good?</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/2023s-billion-dollar-disasters-list-shattered-the-us-record-with-28-big-weather-and-climate-disasters-amid-earths-hottest-year-on-record-220634">2023's billion-dollar disasters list shattered the US record with 28 big weather and climate disasters amid Earth's hottest year on record</a>
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<p>We used slightly different questions in the two studies to understand the drivers of resistance to flood risk mapping based on perceived impact on real estate value. What emerged speaks to the challenge of inspiring long-term and collective thinking about climate change. </p>
<p>Firstly, being focused on oneself rather than others was a reliable predictor of resistance in both studies. </p>
<p>Resistance in the first study was associated with agreeing to the following statements: “I am not able to cope with the land changes required to deal with significant increases in flood risk at this point in my life,” and “flood management decisions I make do not have implications for others.” The latter is demonstrably untrue: shoreline armouring, for instance, can have negative effects for neighbours. In the second study, being focused on others and having descendants led to less resistance. </p>
<p>Self-orientation was a strong underlying driver of resistance. It reduced a person’s likelihood of focusing on others, the future or the biosphere. People already make decisions to suit their own situation, just as the Nova Scotia government is now <a href="https://www.halifaxexaminer.ca/morning-file/the-houston-government-thinks-we-can-use-an-app-to-ward-off-storm-damage-and-sea-level-rise-individually-we-cant/#N1">encouraging coastal landowners to do</a>. Yet in these kinds of scenarios, collective and ecological interests are forgotten.</p>
<p>Secondly, the more vulnerable a person felt to flood risk, the more likely they were to oppose maps that would allow others to see their flood risk. This variable was only a strong signal of resistance in the second study when we used a combination of flood likelihood and vulnerability to measure it. This might also explain why resistance was twice as high in the 2022 survey than the one in 2021. It could be a regional difference based on actual differences in risk, or differences in survey method and thus respondent population, but it could also reflect increasing flood frequency and severity.</p>
<p>The second survey was still in the field when <a href="https://www.cbc.ca/news/canada/nova-scotia/weather-snoddon-fiona-recap-1.6976249">Hurricane Fiona</a> hit Atlantic Canada. This timing suggests that instead of becoming more open to climate adaptation information like flood maps as flooding events occur, we might become less open as we seek to protect the value of our biggest investments: our homes. </p>
<h2>Moving forward</h2>
<p>A clue to the path ahead may be found in our first study, where <a href="https://doi.org/10.1111/cag.12836">those who had previously seen a flood map for their region</a> were slightly less likely to be resistant to public flood risk maps. This might indicate that such resistance is mostly borne of fear of the unknown. </p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/wetlands-are-superheroes-expert-sets-out-how-they-protect-people-and-places-221995">Wetlands are superheroes: expert sets out how they protect people and places</a>
</strong>
</em>
</p>
<hr>
<p>We urgently need high quality, public flood risk maps that the government stands by (including with planning regulations). Then we can focus on rethinking what it means to live a good coastal life in the face of climate change, and how we collectively support those who may face decreases in home or land value.</p><img src="https://counter.theconversation.com/content/224902/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Kate Sherren or her trainees received funding for this work from the Social Sciences and Humanities Research Council, the Natural Sciences and Engineering Research Council, and the Nova Scotia Government. </span></em></p>Public concerns for real estate value, and a focus on the self, make flood risk maps unpopular. However, these concerns should not dissuade governments from providing resources we can all trust.Kate Sherren, Professor, School for Resource and Environmental Studies, Dalhousie UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2232652024-02-15T13:33:22Z2024-02-15T13:33:22ZFor graffiti artists, abandoned skyscrapers in Miami and Los Angeles become a canvas for regular people to be seen and heard<figure><img src="https://images.theconversation.com/files/575115/original/file-20240212-16-xnfgow.jpg?ixlib=rb-1.1.0&rect=0%2C8%2C6000%2C4068&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Construction of Oceanwide Plaza in downtown Los Angeles stalled in 2019 after the China-based developer ran out of funding.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/an-aerial-view-of-graffiti-spray-painted-by-taggers-on-at-news-photo/1981900572?adppopup=true">Mario Tama/Getty Images</a></span></figcaption></figure><p>The three qualities that matter most in real estate also matter the most to graffiti artists: location, location, location. </p>
<p>In Miami and Los Angeles, cities that contain <a href="https://realestate.usnews.com/places/rankings/most-expensive-places-to-live">some of the most expensive real estate in the U.S.</a>, graffiti artists have recently made sure their voices can be heard and seen, even from the sky. </p>
<p>In what’s known as “graffiti bombing,” artists in both cities swiftly and extensively tagged downtown skyscrapers that had been abandoned. The efforts took place over the course of a few nights in December 2023 and late January 2024, with the results generating a mix of <a href="https://hyperallergic.com/870121/artists-make-los-angeles-graffiti-history-by-painting-on-abandoned-high-rises/">admiration</a> and <a href="https://www.youtube.com/watch?v=6vLnXWZqv2I">condemnation</a>.</p>
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<figcaption><span class="caption">KTLA 5 news highlights public outrage over a graffitied skyscraper in Los Angeles on Jan. 31, 2024.</span></figcaption>
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<p>As someone who has <a href="https://scholar.google.com/citations?user=gu-Z75sAAAAJ&hl=en">researched the intersection of graffiti and activism</a>, I see these works as major milestones – and not just because the artists’ tags are perhaps more prominent than they’ve ever been, high above street level and visible from blocks away. </p>
<p>They also get to the heart of how money and politics can make individuals feel powerless – and how art can reclaim some of that power.</p>
<h2>Two cities, two graffiti bombings</h2>
<p>Since late 2019, Los Angeles’ billion-dollar Oceanwide Plaza – a mixed-use residential and retail complex consisting of three towers – has stood unfinished. The Beijing-based developer <a href="https://www.latimes.com/business/la-fi-oceanwide-project-stalled-20190223-story.html">was unable to pay contractors</a>, and ongoing financing challenges forced the company to put the project on pause. It’s located in one of the priciest parts of the city, right across the street from Crypto.com Arena, where the 2024 Grammy Awards were held. </p>
<p>Hundreds of taggers were involved in the Los Angeles graffiti bombing. It may never be publicly known how the idea was formed and by whom. But it seemed to have been inspired by a similar project that took place in Miami during <a href="https://www.artbasel.com/miami-beach?lang=en">Art Basel</a>, the city’s annual international art fair.</p>
<p>In November 2023, the city of Miami announced that a permit to demolish <a href="https://floridayimby.com/2023/11/florida-east-coast-realty-seeks-demolition-permit-for-19-story-building-paving-path-for-one-bayfront-plaza-supertall.html">One Bayfront Plaza site</a>, an abandoned former VITAS Healthcare building, had been filed.</p>
<p>Miami is known for <a href="https://www.nytimes.com/2019/10/23/arts/design/miami-murals-wynwood.html">its elaborate spray-painted murals</a>. There’s also <a href="https://shop.bombingscience.com/miami-graffiti-art.html">a rich tradition of graffiti in the city</a>. So Miami was a natural gathering place for graffiti artists during Art Basel in December 2023, and One Bayfront Plaza became the canvas for taggers from around the world.</p>
<p>Over the course of a few days, graffiti artists – some of whom rappelled down the side of the building – <a href="https://www.architecturaldigest.com/story/brutalist-architecture-101">tagged the brutalist</a>, concrete structure with colorful bubble letters spelling their graffiti names: “EDBOX,” “SAUTE” and “1UP,” and hundreds more. </p>
<p>The response to the Miami bombing was more <a href="https://www.complex.com/style/a/lei-takanashi/best-of-art-basel-miami-2023">awe than outrage</a>, perhaps because the building will soon be torn down. It elicited comparisons <a href="https://theconversation.com/what-the-5pointz-ruling-means-for-street-artists-91799">to 5Pointz</a>, a collection of former factory buildings in the Queens borough of New York City that was covered with graffiti and became a landmark before being demolished in 2014.</p>
<p><div data-react-class="TiktokEmbed" data-react-props="{"url":"https://www.tiktok.com/@vandalnine/video/7320253132431297825"}"></div></p>
<h2>Meaning and motivation</h2>
<p>In the early 2000s, when I started researching street graffiti, I learned that there are different names for different graffiti types.</p>
<p>“Tags” are pseudonyms written in marker, sometimes with flourishes. “<a href="https://upmag.com/graffiti-terminology/">Fill-ins</a>” or “throw-ups” are quickly painted fat letters or bubble letters, usually outlined. “<a href="https://museumofgraffiti.com/products/subway-art">Pieces</a>” involve more colorful, complicated and stylized spray-painted letters. </p>
<p>The tradition of painting ornate graffiti names made me think of <a href="https://www.nga.gov/learn/teachers/lessons-activities/sense-of-place-france/cezanne.html">Paul Cézanne</a>, who painted the same bowl of fruit over and over. The carefully chosen names and their letters become the subject that writers use to practice their craft. </p>
<p>But I also wanted to know why people graffitied.</p>
<p>Many graffiti writers tagged spaces to declare their existence, especially in a place like New York City, where it is easy to feel invisible. Some writers who became well known in the early 1970s, like <a href="https://www.nytimes.com/2011/07/23/arts/design/early-graffiti-artist-taki-183-still-lives.html">Taki 183</a>, scrawled <a href="https://timesmachine.nytimes.com/timesmachine/1971/07/21/79680118.html?pageNumber=37">their names and street numbers all over the city</a>.</p>
<p>During my research, I spoke with one New York graffiti artist whose work had garnered a lot of attention in the 1980s. He explained that his writing had no concrete political messages. </p>
<p>“But,” he added, “the act of writing graffiti is always political.” </p>
<p>Another graffiti artist I interviewed, “PEN1,” stood with me on a street in lower Manhattan, pointing out one of his many works. It was a fill-in – huge letters near the top of a three- or four-story building, very visible from the street.</p>
<p>“Those people have paid so much money to put their message up there,” he said, pointing to nearby billboards, “and I get to put my name up there for free.” </p>
<p>Through my project, which I ended up titling “Unofficial Communication,” I came to understand that writing graffiti on walls, billboards and subway cars was a way of disrupting ideas of private ownership in public, outdoor spaces. </p>
<p>It involved three different sets of players. There were the taggers, who represented people defying the status quo. There were the public and private owners of the spaces. And there was the municipal government, which regularly cleaned graffiti from outdoor surfaces and tried to arrest taggers. </p>
<p>In cities across the U.S., then and now, it’s easy to see whose interests are the priority, whose mistakes governments are willing to overlook, and which people they aggressively police and penalize.</p>
<h2>Loud and clear</h2>
<p>The names painted on the Los Angeles skyscrapers are the faster and easier-to-complete <a href="https://www.theartblog.org/2023/01/tags-fill-ins-and-kobe-a-short-appreciation-of-graffiti-in-baltimore-and-everywhere/">fill-ins</a>, since time is at a premium and the artists risk arrest.</p>
<p>These vertical graffiti bombing projects on failed skyscrapers, deliberately or not, call attention to the millions of dollars that are absorbed by taxpayers when private developers make bad investments. </p>
<p>Because the names painted on the buildings are fill-ins, they’re not especially artistic. But they did, in fact, make a political statement. </p>
<p>A former graffiti artist who goes by “ACTUAL” told The Washington Post that he’d come out of retirement to contribute to the Los Angeles project. </p>
<p>“The money invested in [the buildings] could have done so much for this city,” <a href="https://www.washingtonpost.com/entertainment/art/2024/02/08/los-angeles-graffiti-building/">he added</a>. </p>
<p>Some of the graffiti artists in Los Angeles were arrested, and the Los Angeles City Council <a href="https://www.costar.com/article/896685651/los-angeles-officials-start-process-that-may-lead-to-takeover-of-graffitied-skyscraper">is demanding that the owners of Oceanwide Plaza</a> remove the graffiti, described as the work of “criminals” acting “recklessly.”</p>
<p>Meanwhile, the developers of buildings that have sat, unfinished, for years, in the middle of a housing crisis, have broken no laws.</p>
<p>Some reckless acts, apparently, are more criminal than others.</p><img src="https://counter.theconversation.com/content/223265/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Colette Gaiter does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The colorful bubble letters have attracted praise and condemnation, with taggers seeing their work as a gift to the city, while others decry it as rampant vandalism.Colette Gaiter, Professor of Art and Design, University of DelawareLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2190012023-12-10T19:07:54Z2023-12-10T19:07:54ZAustralia’s ‘deeply unfair’ housing system is in crisis – and our politicians are failing us<p>“The fact that one of the least populated countries on Earth contains the world’s second most expensive housing is a national calamity, and a stunning failure of public policy,” writes Alan Kohler, in <a href="https://www.quarterlyessay.com.au/essay/2023/11/the-great-divide">the latest Quarterly Essay</a>.</p>
<p>He doesn’t mince words. We are in a housing crisis – and it is a public policy failure of the biggest kind. This crisis is about more than housing: it is a social and economic crisis, creating a society defined by inherited wealth. </p>
<hr>
<p><em>Review: Quarterly Essay 92: The Great Divide – Australia’s Housing Mess and How to Fix It by Alan Kohler (Black Inc.)</em></p>
<hr>
<p>This has not happened overnight. Kohler maps out 70 years of housing public policy in Australia, starting with changes to the Commonwealth and State Housing Agreement in 1954, when the program was redirected to support home ownership by forcing the states to sell much of what was being built.</p>
<p>By 1971, approximately 40% of the houses built by the Commonwealth State Housing Agreement – which had included 96,000 in its first decade, from 1945 to 1955 – had been sold.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/564403/original/file-20231207-21-xo2nvq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/564403/original/file-20231207-21-xo2nvq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/564403/original/file-20231207-21-xo2nvq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=424&fit=crop&dpr=1 600w, https://images.theconversation.com/files/564403/original/file-20231207-21-xo2nvq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=424&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/564403/original/file-20231207-21-xo2nvq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=424&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/564403/original/file-20231207-21-xo2nvq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=533&fit=crop&dpr=1 754w, https://images.theconversation.com/files/564403/original/file-20231207-21-xo2nvq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=533&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/564403/original/file-20231207-21-xo2nvq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=533&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">After 1954, Australia sold much of its public housing. This public housing in Brisbane was built around 1950.</span>
<span class="attribution"><a class="source" href="https://en.wikipedia.org/wiki/Queensland_Housing_Commission#/media/File:BrisbaneSuburbanOuthouses1950.jpg">John Oxley Library, State Library of Queensland</a></span>
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</figure>
<p>These changes have led to a generational fracture in housing pathways and a breakdown in one of the key pillars that defined Australia’s welfare state in the 20th century. </p>
<p>Somewhat refreshingly, Kohler captures a sentiment many of us with newly minted mortgages or stuck in private rental know, deep down: Australia’s housing system is in crisis, it is deeply unfair and our politicians are failing us. </p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/friday-essay-how-policies-favouring-rich-older-people-make-young-australians-generation-f-d-199403">Friday essay: how policies favouring rich, older people make young Australians Generation F-d</a>
</strong>
</em>
</p>
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<h2>‘Housing is a human right’</h2>
<p>Kohler argues the seeds of the problems we now face were established not long after the second world war, when, as he points out, the Australian government was directly funding the delivery of over 50,000 dwellings annually. Over half a century, the decline in government support for the development of new housing – and in particular for new public housing – underlies the current crisis.</p>
<p>In 1947, just 53.4% of Australians owned a home. By 1966, this had risen to 71.4%. Robert Menzies, prime minister from 1949 to 1966, claimed the credit. Now, in 2023, it’s dropped to around 66%.</p>
<p>But, Kohler says, the credit Menzies claimed for expanding access to housing is “unjustified” – instead, he and his Minister for Social Services, Bill Spooner, “destroyed” public housing and “set the scene for decades of mistakes by their successors in the Coalition”.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/564166/original/file-20231207-17-kvs0p.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/564166/original/file-20231207-17-kvs0p.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/564166/original/file-20231207-17-kvs0p.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=338&fit=crop&dpr=1 600w, https://images.theconversation.com/files/564166/original/file-20231207-17-kvs0p.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=338&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/564166/original/file-20231207-17-kvs0p.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=338&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/564166/original/file-20231207-17-kvs0p.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=424&fit=crop&dpr=1 754w, https://images.theconversation.com/files/564166/original/file-20231207-17-kvs0p.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=424&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/564166/original/file-20231207-17-kvs0p.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=424&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">In 1966, 71.4% of Australians owned a home. Now, it’s around 66%.</span>
<span class="attribution"><span class="source">Tom Rumble/Unsplash</span></span>
</figcaption>
</figure>
<p>The subversion of the public housing program from the mid-50s onwards, reflecting the conservative and nationalist agenda of the Menzies government that instigated it, shifted the policy position on public housing from being a key plank in the building of a modern nation, to one of residual welfare. Kohler makes the case that “housing is not welfare, it’s an economic right”. </p>
<p>Housing is more than that: it is a human right. The wider point though, is that housing and housing policy is integral to the economic welfare of all Australians – and only considering it in terms of social welfare, a policy space that has suffered from malign neglect over half a century, has consigned housing policy to the wilderness. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/insecure-renting-ages-you-faster-than-owning-a-home-unemployment-or-obesity-better-housing-policy-can-change-this-216364">Insecure renting ages you faster than owning a home, unemployment or obesity. Better housing policy can change this</a>
</strong>
</em>
</p>
<hr>
<h2>Tax reduction and capital gains</h2>
<p>While the conditions may have been set long ago, the key changes that culminated in this affordability crisis began around 2000. Discounts on capital gains, <a href="https://www.theage.com.au/opinion/revenge-bloodymindedness-and-gullibility-the-untaxing-of-capital-gains-20150810-giv8zg.html">introduced by the Howard government</a> in 1999, lit the fuse on this housing bonfire. </p>
<p>The tax and wealth advantages of property investing were so beneficial, it unleashed a tidal wave of demand in housing. High-income-earners in particular could reduce tax on their income, then get a kicker on capital gains later. Kohler notes that these changes have meant:</p>
<blockquote>
<p>whereas in the rest of the world investing in real estate is all about getting rental income from tenants, in Australia it’s about getting an income tax deduction and then capital gain.</p>
</blockquote>
<p>The charts presented in the essay can almost pinpoint the exact moment these changes passed through parliament (see below). Dwelling prices detached themselves from income growth. </p>
<p>Since 2000, there has been a 6% component growth in dwelling values, compared with only 3% for incomes. Prices are so detached from incomes, it is no longer possible for the average earning household to afford the average house. </p>
<h2>Housing now defines class</h2>
<p>As the essay’s title suggests, Kohler makes the case that over the past 30 years, public policy has created a society increasingly defined and divided by inherited wealth. Wealth is now determined, he argues, by two things: where you live, and the house you inherit from your parents. </p>
<p>There are two important dimensions to this. The first is that wealth (and wealth creation) has been deeply embedded in housing ownership. Lisa Adkins, Melinda Cooper and Martijn Konings at the University of Sydney have termed this the <a href="https://www.wiley.com/en-us/The+Asset+Economy-p-9781509543458">“asset economy”</a> and argue new class positions are being defined through housing assets. </p>
<p>Traditionally, class was often defined through the type of job you did. Now, it is increasingly defined by how much property you own. Renters of course, don’t even get a look-in. This change really got underway from the mid-1980s, led by the then-Labor government through financial deregulation, broad privatisation of urban services and residualisation of welfare. </p>
<p>Secondly, opportunity is now no longer tied to education and hard work: it’s now inherited. The simple arithmetic on the historical trends Kohler presents exposes how the scale of the problem has shifted since the 1990s. The median price of housing has grown from around three times the median income in 1990 to around eight times in 2023. </p>
<p>For housing to be affordable, house prices would need to halve, or incomes would need to grow at 4% per year for 20 years, while house prices stayed the same. Neither is likely. As <a href="https://dx.doi.org/10.18408/ahuri7327301">our recent research</a> has shown, the problem is so extreme that in places like Sydney, the only pathway to ownership is through inherited wealth and the bank of Mum and Dad.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/564160/original/file-20231207-15-tzvzwq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/564160/original/file-20231207-15-tzvzwq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/564160/original/file-20231207-15-tzvzwq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/564160/original/file-20231207-15-tzvzwq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/564160/original/file-20231207-15-tzvzwq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/564160/original/file-20231207-15-tzvzwq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/564160/original/file-20231207-15-tzvzwq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/564160/original/file-20231207-15-tzvzwq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">In places like Sydney, the only path to home ownership is inherited wealth.</span>
<span class="attribution"><span class="source">Ketut Subiyanto/Pexels</span></span>
</figcaption>
</figure>
<h2>Housing: ‘a cartel of the majority’</h2>
<p>Many of the broad threads of this essay were on point. They lay out how policy has not only failed to address housing problems, but actively created them. There were, however, some contradictory moments. </p>
<p>The first was around housing supply. After noting the key historical threads, Kohler points the finger at recalcitrant planners for blocking development. But planners, as he points out, “do not build housing, developers do”. Moreover, he acknowledges the whole “property development business model favours selling apartments to individual investors who can pay more”. </p>
<p>Blaming planners is not new, but it ultimately misses the point. <a href="https://osf.io/r925z/download">A recent analysis</a> suggested there were over 100,000 approved but unbuilt dwelling units in Australia between 2012 and 2000. The supply system itself is now thoroughly geared to capital flowing from investors. If developers cannot sell to them, or simply cannot make enough profit, the banks won’t lend and developers won’t build. </p>
<p>As Kohler notes, the politics of this is simple:</p>
<blockquote>
<p>housing is a cartel of the majority, with banks and developers helping them maintain high house prices with the political class actively supporting them.</p>
</blockquote>
<p>Even if financing constraints could be overcome and developers could build what they liked, <a href="https://www.rba.gov.au/publications/rdp/2019/2019-01.html">the Reserve Bank Australia itself</a> noted this would only drop prices by about 2.5%. When prices rose by 25% in 2021, this hardly seems revolutionary. </p>
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<p>The real issue of supply is exposed in the essay, but unfortunately not returned to in the resolution. <a href="https://cityfutures.ada.unsw.edu.au/social-and-affordable-housing-needs-costs-and-subsidy-gaps-by-region/">Our recent analysis</a> showed Australia would need to deliver around 45,000 social housing dwellings per year for 20 years to meet the current backlog in demand. </p>
<p>When Commonwealth and state governments managed to create over 50,000 dwellings in 1950, when the population was one third what it is today, meeting today’s need should not be a problem. But the current government ambition is just 30,000 over five years – which is woeful. Even if those numbers are delivered, the share of social housing will still be going backwards. </p>
<p>There is much to like in this essay, which clearly demonstrates that the current housing crisis is about so much more than the shelter it represents. </p>
<p>Housing is deeply implicated in the very idea of what it means to be Australian and the egalitarian values many Australians hold dear. Unfortunately, the inequalities that are emerging are cementing new class inequalities – now, your chances in life will be completely dependent on the family you were born into. </p>
<p>The sooner we realise this, the sooner there can be a collective reflection. We need to ask: is that what we really want?</p><img src="https://counter.theconversation.com/content/219001/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Laurence Troy receives funding from the the Australian Research Council (ARC), and the Australian Housing and Urban Research Institute (AHURI). </span></em></p>Alan Kohler’s Quarterly Essay lays out how the policies of successive governments have not only failed to address housing problems, but actively created them.Laurence Troy, Senior Lecturer in Urbanism, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2151472023-11-05T19:13:05Z2023-11-05T19:13:05ZHomeowners often feel better about life than renters, but not always – whether you are mortgaged matters<p>Homeownership has long been thought of as the <a href="https://www.abc.net.au/news/2017-08-23/why-australians-are-obsessed-with-owning-property/8830976">great Australian dream</a>. For individuals, it’s seen as the path to adulthood and prosperity. For the nation, it’s seen as a cornerstone of economic and social policy.</p>
<p>Implicit in this is the assumption that owning a home rather than renting one makes people better off.</p>
<p>It’s an assumption we are now able to examine using data from the government-funded <a href="https://melbourneinstitute.unimelb.edu.au/hilda">Household, Income and Labour Dynamics in Australia</a> (HILDA) survey, which for two decades has asked questions both about homeownership and satisfaction with life.</p>
<p>The <a href="https://melbourneinstitute.unimelb.edu.au/__data/assets/pdf_file/0007/4694137/ContinuingPersonQuestionnaireW23M.pdf">overarching question</a> asks</p>
<blockquote>
<p>all things considered, how satisfied are you with your life? Pick a number between 0 and 10 to indicate how satisfied you are</p>
</blockquote>
<p>We also looked at people’s satisfaction with their financial situation, their home and the neighbourhood in which they live.</p>
<p>In a study published in the journal <a href="https://journals.sagepub.com/doi/10.1177/00420980231190479">Urban Studies</a>, we linked those answers to home ownership and characteristics including age and income.</p>
<p>As expected, we found homeowners were generally more satisfied with their lives than renters. But we also find the extent to which they were more satisfied depended on whether or not they were still paying off a mortgage.</p>
<h2>Mortgaged homeowners about as satisfied as renters</h2>
<p>Outright home owners were 1.5 times as likely to report high overall satisfaction as renters. But home owners still paying off a mortgage were only a little more likely to feel high overall satisfaction. </p>
<p>Similarly, outright owners were 2.3 times as likely to report high financial satisfaction as renters – but mortgaged owners were only 1.1 times as likely.</p>
<p>When it comes to satisfaction with their home and neighbourhood, the differences were less extreme. </p>
<p>Outright home owners were 3.1 times as likely to report high satisfaction with their home as renters, while mortgaged owners were 2.8 times as likely. </p>
<p>Outright owners were 1.6 times as likely to report high satisfaction with their neighbourhood as renters, and mortgaged owners 1.4 times as likely.</p>
<p>The results also varied with age and income.</p>
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<p>As shown in the graph above, outright owners were more likely to report high financial satisfaction than renters across almost the entire age range.</p>
<p>But mortgaged owners only showed a demonstrably greater financial satisfaction than renters between the ages of 25 and 50. </p>
<p>Beyond age 50, the existence of a mortgage debt burden appeared to cancel out any boost to financial satisfaction from homeownership. This potentially reflects the growing financial stress of making mortgage payments as retirement approaches.</p>
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<p>By income, mortgaged owners reported experiencing more financial satisfaction compared to renters the more they earned between A$80,000 and A$240,000. Outright owners experienced more financial satisfaction than renters up to A$320,000. </p>
<p>Beyond these income levels, owners did not have greater financial satisfaction than renters, perhaps because high-earning renters have other sources of financial satisfaction.</p>
<h2>How satisfied people feel beyond 60</h2>
<p>In other respects, outright owners and mortgaged homeowners showed similar patterns, becoming more satisfied with their homes relative to renters the more they age up – until the age of 60. That’s when their satisfaction relative to renters declined, as illustrated below. </p>
<p>This decline might reflect the growing physical burden of maintaining an owned home as people age.</p>
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<p>Our study has important implications. One is that age matters.</p>
<p>Although older people consistently express a desire to <a href="https://www.ahuri.edu.au/analysis/brief/whats-needed-make-ageing-place-work-older-australians">age in place</a>, we found satisfaction among those who owned vs rented their home declined beyond age 60. This suggests better integration between housing and care is critical to support people ageing in place. </p>
<p>Another implication is that as low-income owners are more reliant on their homes as a source of relative financial satisfaction than high earners, they are <a href="https://www.cambridge.org/core/journals/journal-of-social-policy/article/housing-equity-withdrawal-perceptions-of-obstacles-among-older-australian-home-owners-and-associated-service-providers/268F54A8EAA1E9ECA118E243505AA9FD">more exposed</a> in times of crisis. They may face the risk of being forced to sell suddenly with little time to consider the consequences.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/the-housing-wealth-gap-between-older-and-younger-australians-has-widened-alarmingly-in-the-past-30-years-heres-why-197027">The housing wealth gap between older and younger Australians has widened alarmingly in the past 30 years. Here's why</a>
</strong>
</em>
</p>
<hr>
<p>And another implication is as the relative financial satisfaction of mortgage holders disappears after the age of 50, and as more of us approach retirement with mortgages intact, more of us will either <a href="https://journals.sagepub.com/doi/10.1177/00420980211026578">postpone retirement</a> or become dissatisfied.</p>
<p>Our findings suggest the extension of mortgage debt into later life should be discouraged if the benefits of the Australian dream are to be preserved.</p><img src="https://counter.theconversation.com/content/215147/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Rachel Ong ViforJ is the recipient of an Australian Research Council Future Fellowship (project FT200100422). </span></em></p><p class="fine-print"><em><span>Hiroaki Suenaga and Ryan Brierty do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>We found people who own their home outright were 1.5 times as likely to be highly satisfied with life as renters. But it can be a different story if you have a mortgage – especially if you’re 50-plus.Rachel Ong ViforJ, ARC Future Fellow & Professor of Economics, Curtin UniversityHiroaki Suenaga, Senior Lecturer School of Accounting, Economics and Finance, Curtin UniversityRyan Brierty, PhD candidate, School of Accounting, Economics and Finance, Curtin UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2114782023-10-26T12:32:45Z2023-10-26T12:32:45ZI studied 1 million home sales in metro Atlanta and found that Black families are being squeezed out of homeownership by corporate investors<figure><img src="https://images.theconversation.com/files/554093/original/file-20231016-21-isn6c7.jpg?ixlib=rb-1.1.0&rect=40%2C32%2C5414%2C3026&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Corporate investors own nearly one-third of all single-family rental properties in Atlanta.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/atlanta-georgia-usa-downtown-skyline-aerial-royalty-free-image/1184733973">Kruck20/iStock via Getty Images</a></span></figcaption></figure><p>In the years since the Great Recession, when <a href="https://www.federalreservehistory.org/essays/great-recession-and-its-aftermath">housing prices dramatically fell</a>, Wall Street investors have been buying large numbers of single-family homes to use as rentals. As of 2022, big investment firms <a href="https://www.urban.org/research/publication/profile-institutional-investor-owned-single-family-rental-properties">owned nearly 600,000 such properties nationwide</a>.</p>
<p><a href="https://www.huduser.gov/portal/periodicals/em/winter23/highlight1.html#title">Critics say</a> this practice drives up home prices and worsens the housing shortage, making it harder for families to afford to buy. Industry advocates <a href="https://thehill.com/opinion/congress-blog/3496390-providers-of-single-family-rental-homes-are-an-important-part-of-americas-housing-ecosystem/">dismiss such charges</a>, arguing that large investment firms own a tiny fraction of single-family rental housing across the U.S. – <a href="https://www.urban.org/research/publication/profile-institutional-investor-owned-single-family-rental-properties">less than 4%</a> of the total.</p>
<p>As a <a href="https://scholar.google.com/citations?user=cxLejGQAAAAJ&hl=en&oi=ao">professor of public policy at Georgia Tech</a>, I wanted to understand how this trend was affecting my neighbors. So I analyzed <a href="https://doi.org/10.1177/0739456X231176072">more than 1 million property sales</a> in the Atlanta metropolitan area from 2007 to 2016. Since the study period included the <a href="https://www.federalreservehistory.org/essays/subprime-mortgage-crisis">mortgage crisis</a>, I excluded bulk sales, such as the packages of
foreclosed homes, that aren’t available to typical homebuyers. I examined only <a href="https://www.investopedia.com/terms/a/armslength.asp">arm’s-length transactions</a> of single-family detached homes, where buyers and sellers act independently. </p>
<p>I found that global investment firms buying up local properties are indeed hurting Atlanta families – specifically, Black ones. </p>
<h2>Neighborhood transformations</h2>
<p>In the period I studied, homeownership declined across the Atlanta metro area by <a href="https://www.census.gov/housing/hvs/data/rates/tab6a_msa_05_2014_hmr.xlsx">more than 5 percentage points</a>, similar to a nationwide trend. For an average neighborhood, home purchasing by large corporate investors explained one-quarter of that decline. </p>
<p>But when I broke the analysis down by race, I found that Black families were hit much harder: Large investment firms buying up local properties explained fully three-quarters of the decline in African American homeownership. In contrast, non-Hispanic whites were largely unaffected. </p>
<p>It turns out that while Wall Street firms control just a sliver of the single-family rental market nationally, they can have much more influence at the local level. In the Atlanta metro area, these firms own nearly one-third of all single-family rental properties. They’re even more concentrated <a href="https://www.washingtonpost.com/business/interactive/2021/investors-rental-foreclosure">in predominantly Black neighborhoods</a>, where <a href="https://www.ajc.com/american-dream/investor-owned-houses-atlanta/">more than 10 houses in a row</a> can be owned by the same corporation.</p>
<p>In my study, I found that large investors tend to snap up housing in majority-nonwhite, lower-income suburban neighborhoods. This makes homebuying even more challenging for middle-class families of color, as they get <a href="https://www.huduser.gov/portal/periodicals/em/winter23/highlight1.html">pushed out of the bidding market</a> by global investors. </p>
<h2>Home is where the financial security is</h2>
<p>Homeownership has long been one of the main pathways for the American middle class to accumulate wealth. Despite this, the national homeownership rate declined <a href="https://fred.stlouisfed.org/series/RHORUSQ156N">by 5.5 percentage points</a> between 2007 and 2016, reaching a five-decade low of 62.9%. Although homeownership has rebounded somewhat since 2016, it remains below pre-2008 levels. </p>
<p>And who owns these homes is starkly divided by race. Between 2015 and 2019, more than 70% of white families owned a home, compared with <a href="https://www.jchs.harvard.edu/blog/nearly-every-state-people-color-are-less-likely-own-homes-compared-white-households">just 41% of Black families</a>, according to an analysis by Harvard University’s Joint Center for Housing Studies. </p>
<p>To be sure, policies like <a href="https://www.nytimes.com/2021/08/17/realestate/racism-home-deeds.html">racial covenants</a>, <a href="https://uncpress.org/book/9781469663883/race-for-profit/">discriminatory mortgage lending practices</a> <a href="https://www.epi.org/publication/the-color-of-law-a-forgotten-history-of-how-our-government-segregated-america/">and redlining</a> fueled low homeownership rates for Black Americans long before the Great Recession. But global investors’ growing control of single-family homes only widens existing racial gaps in homeownership and wealth.</p>
<h2>Directions for new research</h2>
<p>While my study focused on Atlanta, it’s not the only place where residents are <a href="https://www.huduser.gov/portal/periodicals/em/winter23/highlight1.html">competing with global investors</a> for housing. Investment firms’ single-family rental portfolios are largely <a href="https://www.urban.org/sites/default/files/2023-08/A%20Profile%20of%20Institutional%20Investor%E2%80%93Owned%20Single-Family%20Rental%20Properties.pdf">concentrated in Sun Belt metro areas</a>, including Phoenix, Charlotte and Jacksonville. It wouldn’t be surprising to see similar conflicts playing out in those cities. </p>
<p>Since my analysis stopped in 2016, I can’t be sure that Black Atlanta residents are still affected by Wall Street firms buying up housing. Many investment firms have recently been <a href="https://www.wsj.com/real-estate/americas-biggest-landlords-cant-find-houses-to-buy-either-ea893213">switching from a buy-to-rent</a> business model to a <a href="https://www.wsj.com/articles/building-and-renting-single-family-homes-is-top-performing-investment-11636453800">build-to-rent model</a>, which could complicate matters.</p>
<p>In the meantime, while <a href="https://www.banking.senate.gov/hearings/how-institutional-landlords-are-changing-the-housing-market">residents and policymakers have claimed</a> that large corporations don’t invest in local communities, researchers lack robust evidence this is the case. Academics should study whether properties owned by institutional landlords are more likely to be <a href="https://www.ajc.com/american-dream/investor-owned-houses-atlanta/">poorly maintained</a> or have <a href="https://www.washingtonpost.com/business/2022/07/12/invitation-homes-corporate-landlord-permits/">code violations</a>, as anecdotal evidence suggests.</p>
<p>It’s also worth investigating whether big investment firms undermine local revenue collection by <a href="https://www.charlotteobserver.com/news/business/article277638663.html">serially filing property tax appeals</a>. </p>
<h2>An open-source tool for housing policy research</h2>
<p>It’s been hard for researchers to identify corporate-owned, single-family homes, since it requires proprietary real-estate data and labor-intensive number crunching. In a separate project, my colleagues and I have developed a <a href="https://repository.gatech.edu/entities/publication/472788f9-a5e6-4d9b-8238-422d20333bcb">simple, user-friendly methodology</a> that gets around such challenges with the use of open-source software and public tax parcel data. </p>
<p>Local governments and nonprofits can use our methodology to unveil all the corporate-owned residential properties in any neighborhood and link them to outcomes such as code violations. Using data-driven approaches like this is an important step toward developing policy solutions.</p><img src="https://counter.theconversation.com/content/211478/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Brian Y. An does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Black would-be homeowners pay the price when big investors buy up the neighborhood.Brian Y. An, Director of Master of Science in Public Policy Program & Assistant Professor of Public Policy, Georgia Institute of TechnologyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2125932023-09-13T08:07:31Z2023-09-13T08:07:31ZWhy China’s real estate crisis should make the global travel industry nervous<figure><img src="https://images.theconversation.com/files/547128/original/file-20230908-23-4t57w9.jpg?ixlib=rb-1.1.0&rect=66%2C0%2C10671%2C4464&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The global tourism industry is rebounding – but cautious Chinese consumers are choosing to stay closer to home.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/shanghai-royalty-free-image/859753342">DuKai photographer/Moment/Getty Images</a></span></figcaption></figure><p>Once upon a time – in 2019 – tourists from China were among the best-traveled in the world. They collectively spent <a href="https://www.wsj.com/articles/worlds-biggest-tourism-spenders-arent-travelingand-may-not-for-years-3195de39">more than US$250 billion</a> abroad – nearly twice as much as their nearest competitors, the Americans – and <a href="http://www.xinhuanet.com/english/2020-11/11/c_139509342.htm">logged more than 150 million departures</a> on international flights that year.</p>
<p>The COVID-19 pandemic <a href="https://doi.org/10.1177/13548166211041209">shook the Chinese travel industry</a>, as it did the world’s. But despite the easing of pandemic restrictions – and a <a href="https://www.unwto.org/news/tourism-on-track-for-full-recovery-as-new-data-shows-strong-start-to-2023">global tourism rebound</a> – Chinese tourists have been <a href="https://www.ft.com/content/0d27a68c-7ca0-4069-a401-a5522755d9d1">slow to return</a> to the global skies. The reason, interestingly enough, could be found in the very land and houses Chinese planes fly over.</p>
<p>As <a href="https://scholar.google.com/citations?user=GG5p4TkAAAAJ&hl=en">a professor of marketing</a> who specializes in consumer psychology, I’m interested in how China’s <a href="https://www.nytimes.com/2023/08/20/business/china-property-crisis-country-garden.html">struggling real estate sector</a> is dragging down consumer spending – and having an effect on tourist destinations around the world.</p>
<h2>Real property, real problems</h2>
<p>To understand the issue, first you need to understand China’s current real estate crisis. Just how bad is it? China’s largest developer, Country Garden, lost <a href="https://www.nytimes.com/2023/08/30/business/china-country-garden-share-sell.html">$7.1 billion</a> in the first six months of 2023; investors concerned about <a href="https://www.reuters.com/business/default-dodged-country-gardens-upcoming-debt-payments-stir-worries-2023-09-07/">potential debt default</a> have sent its stock plummeting. </p>
<p>Another major developer, the troubled China Evergrande Group, posted a <a href="https://www.bbc.com/news/business-66636359">$4.5 billion loss</a> over the same period and <a href="https://www.reuters.com/world/china/china-evergrande-files-protection-us-court-part-32-bln-debt-overhaul-2023-08-18/">sought bankruptcy protection</a> in the U.S. last month. It gained international attention in 2021 after it <a href="https://www.cnn.com/2021/12/10/business/evergrande-government-intervention-intl-hnk/index.html">defaulted on $300 billion</a> of debt, sparking the current crisis. </p>
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<p>One major – if indirect – reason China’s real estate industry is so shaky is that local governments are <a href="https://www.thepaper.cn/newsDetail_forward_13283501">heavily dependent</a> on tax revenue from land sales, as well as property taxes and real estate development fees. At the same time, about 70% of the general population’s assets are <a href="https://www.sohu.com/a/665428422_121123889">invested in real estate</a>.</p>
<p>Those facts enticed developers and local governments alike to borrow excessively to fund new development. When the central government started to implement <a href="https://pdf.dfcfw.com/pdf/H301_AP202305101586440193_1.pdf">more stringent regulations</a> to curb speculation and control prices, the market predictably cooled – and has kept cooling. In July 2023, new home sales from China’s top 100 developers were down 33% from the previous year. Prices are slumping, too.</p>
<p>This has had a cascade of effects on the Chinese economy. Most immediately, as demand for construction materials and labor has fallen, hiring has cooled and consumers are <a href="https://www.wsj.com/world/china/chinas-economy-shows-fresh-signs-of-weakness-in-factories-consumer-spending-ad46fa8a">tightening their belts</a>. Local governments are also struggling to stay afloat with less revenue, with some provinces being forced to <a href="https://www.voanews.com/a/civil-service-pay-cuts-reflect-china-s-economic-struggles-/7202609.html">slash government salaries and benefits</a>.</p>
<h2>Why staycations suddenly appeal</h2>
<p>The situation is especially challenging for homeowners, who are burdened with shrinking wealth as housing prices fall. This has had a ripple effect on spending, as cautious consumers increasingly prioritize their savings – worsening the economic challenge for businesses across the country.</p>
<p>Unsurprisingly – at least to anyone who’s paid attention to the world economy – what happens in China doesn’t stay in China. And the global tourism industry has been hit particularly hard as newly budget-conscious Chinese homeowners pare back their spending. </p>
<p>As of April 2023, Chinese tourism to Japan <a href="https://www.163.com/dy/article/I5GR1FB40544QVMF.html">was down some 85% since 2019</a>, even though overall visits to Japan had rebounded to 70% of pre-pandemic levels. Chinese tourism to popular European destinations such as France, Switzerland, Greece and Spain <a href="https://www.handelsblatt.com/unternehmen/handel-konsumgueter/reisebranche-europa-wartet-sehnsuechtig-auf-touristen-aus-china/29020102.html">has also fallen sharply</a>. All in all, China’s outbound travel spending is forecast to be <a href="http://travel.china.com.cn/txt/2023-06/05/content_86374824.shtml">down nearly 70%</a> this year from its pre-pandemic peak.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/547612/original/file-20230911-23-ppbxez.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Beneath a sign reading Sal Tours, a man and woman behind a desk show paperwork to a woman in front of the desk." src="https://images.theconversation.com/files/547612/original/file-20230911-23-ppbxez.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/547612/original/file-20230911-23-ppbxez.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/547612/original/file-20230911-23-ppbxez.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/547612/original/file-20230911-23-ppbxez.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/547612/original/file-20230911-23-ppbxez.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/547612/original/file-20230911-23-ppbxez.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/547612/original/file-20230911-23-ppbxez.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">A customer discusses overseas travel opportunities with two employees at an agency in Chengdu, China, on Feb. 10, 2023.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/citizen-consults-about-overseas-travel-products-at-a-travel-news-photo/1247045092">Tang Wenhao/Xinhua via Getty Images</a></span>
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<p>To be fair, tourism within China is bouncing back – to a degree – as frugal travelers increasingly opt to <a href="https://www.cnbc.com/2023/07/26/china-travel-boom-happen-but-recovery-is-underway.html">vacation closer to home</a>. The China Tourism Academy predicts that domestic tourism will hit <a href="https://www.bloomberg.com/news/articles/2023-07-28/china-s-domestic-tourism-to-hit-90-of-pre-covid-levels-in-2023">90% of pre-pandemic levels</a> in 2023. But that alone won’t offset the impact of lower consumer confidence. Part of the reason is that the amount of money <a href="https://www.reuters.com/world/china/chinas-domestic-travel-recovery-marred-by-anti-spending-special-forces-2023-05-17/">travelers are willing to spend</a> is down.</p>
<p>And faced with demand challenges as well as the effects of COVID-19 and geopolitical strife, Chinese travel agencies have been shuttering en masse in recent years. From January to April 2022, some 8,500 tourism agents and firms <a href="https://finance.sina.com.cn/chanjing/cyxw/2022-05-12/doc-imcwiwst7042907.shtml">declared bankruptcy</a>. Even assuming some reopen, that churn and disruption bode ill for the sector.</p>
<p>Global tourism has faced a challenging few years, with the pandemic and increased fuel costs putting off would-be travelers. With Chinese consumers feeling down in the dumps over the economy and opting for modest vacations, a recovery will be that much harder.</p><img src="https://counter.theconversation.com/content/212593/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Zhiyong Yang does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Big-spending Chinese tourists once buoyed the global travel industry. But with Chinese economy looking a little shaky, more are staying at home.Zhiyong Yang, Professor of Marketing, Miami UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2121862023-09-10T20:05:50Z2023-09-10T20:05:50ZHow much did Chinese investors drive up Sydney home prices? It’s less than you might think<figure><img src="https://images.theconversation.com/files/546804/original/file-20230907-15303-fxewci.png?ixlib=rb-1.1.0&rect=71%2C844%2C3437%2C1532&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>When China cracked down on money leaving the country in 2017, some Sydney home prices fell 3%, while in other suburbs the restrictions had next to no impact.</p>
<p>This finding – from research <a href="https://www.australiachinarelations.org/content/xunpeng-shi">Xunpeng Shi</a> and I recently published in the journal <a href="https://www.tandfonline.com/doi/full/10.1080/02673037.2023.2222675">Housing Studies</a> – shows Chinese investors have had some effect on local house prices. However, our research also shows the impact has been much less – and less widespread – than <a href="https://www.australiachinarelations.org/content/utsacribida-poll-2023">many Australians</a> think. </p>
<p>We found the only Sydney suburbs in which Chinese buyers appeared to have had a strong impact on prices were those with large concentrations of Chinese residents.</p>
<h2>Getting money out of China used to be easy</h2>
<p>Australia’s rules make it harder for foreigners to buy Australian homes, among other things limiting purchases to <a href="https://www.canstar.com.au/home-loans/australian-property-market-foreign-investment-rules/">new dwellings and vacant land</a>. </p>
<p>But until 2017, it was fairly easy to get money out of China.</p>
<p>Among the channels commonly used were AliPay, WeChat, UnionPay, credit cards and underground banks specialising in foreign exchange and holding properties on behalf of Chinese citizens.</p>
<p>On December 30 2016, the People’s Bank of China published an order entitled <a href="https://www.cecc.gov/resources/legal-provisions/measures-on-the-administration-of-reporting-of-large-value-and-suspicio-0">Administrative Measures on Reporting for Large-Value Transactions and Suspicious Transactions</a>, limiting foreign currency conversions to US$50,000 per person and explicitly banning the purchase of foreign properties.</p>
<p>It came into effect on July 1 2017.</p>
<h2>Tighter controls made buying Sydney property harder</h2>
<p>Before the order, in 2016, Chinese overseas direct foreign investment in Australia totalled US$11.5 billion. </p>
<p>By 2019 it had slid to <a href="https://kpmg.com/au/en/home/insights/2022/04/demystifying-chinese-investment-in-australia-april-2022.html">US$2.4 billion</a>.</p>
<p>A real estate agent specialising in the Sydney CBD high-end dwellings was quoted in 2020 as saying Chinese buyers dominated the market between 2013 and 2017, but bought only <a href="https://www.news.com.au/finance/economy/australian-economy/experts-debate-impact-of-chinese-buyers-on-australian-property-market/news-story/265d865b94b231b72a56e550ef6e9252">one or two</a> in 2018.</p>
<p>Our study used this rare <a href="https://www.britannica.com/science/natural-experiment">natural experiment</a> to estimate the effect Chinese buyers had had on Sydney home prices.</p>
<p>We did this by comparing what happened to prices in the suburbs with a high concentration of Chinese owners to what happened in those with few Chinese owners. </p>
<p>To do so, we split Sydney’s 678 suburbs into “Chinese” and “non-Chinese”, based on their populations in the 2016 Census.</p>
<h2>Prices fell 3% in these suburbs – with little impact elsewhere</h2>
<p>We compared prices 18 months before and 18 months after the change, using a number of different cutoff points to define “Chinese” and “non-Chinese” suburbs.</p>
<p>We found China’s restrictions pushed down prices in what we defined as Sydney’s “Chinese” suburbs by around 3%. In contrast, the restrictions had next to no impact on prices in other suburbs.</p>
<p>This remained the case when we checked our results against the ten most “Chinese” suburbs identified by the publication <a href="https://sydneysuburbreviews.com/10-most-chinese-sydney-suburbs/">Sydney Suburb Reviews</a>: Haymarket, Carlingford, Chippendale, Zetland, Chatswood, Ultimo, Eastwood, Rhodes, Burwood, and Hurstville. </p>
<p>It also remained the case when we took into account other changes in Australian foreign investment rules during the period.</p>
<h2>Overall, Chinese buyers had a limited impact</h2>
<p>Our findings have important implications. They suggest <a href="https://www.theguardian.com/australia-news/2021/jul/08/more-than-80-of-australians-mistakenly-believe-chinese-investors-are-driving-up-house-prices">ongoing concerns</a> about Chinese capital and Chinese investors driving up Australian home prices and exacerbating affordability problems are overstated.</p>
<p>Foreign investment should be welcomed to the extent that it helps boost Australia’s housing supply. Our study found its effect on housing affordability is marginal and limited to particular suburbs.</p>
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Read more:
<a href="https://theconversation.com/think-curbing-overseas-migration-will-end-the-housing-crisis-it-wont-and-we-cant-afford-to-do-it-211120">Think curbing overseas migration will end the housing crisis? It won't – and we can't afford to do it</a>
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<img src="https://counter.theconversation.com/content/212186/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Song Shi receives funding from Australia-China Relations Institute at University of Technology Sydney. Song Shi has an honorary appointment of ACRI Research Associate.</span></em></p>China made it much harder for money to leave the country in 2017. Our study looked at Sydney home prices before and after that crackdown – and these are the suburbs where we found prices changed.Song Shi, Associate Professor School of Built Environment, University of Technology SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2084132023-07-06T21:05:34Z2023-07-06T21:05:34ZWhat you need to know about Canada’s new first home savings account<figure><img src="https://images.theconversation.com/files/536120/original/file-20230706-23-sa3997.jpg?ixlib=rb-1.1.0&rect=0%2C18%2C4167%2C3080&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The first home savings account is designed to help more Canadians reach the goal of home ownership.</span> <span class="attribution"><span class="source">(Shutterstock)</span></span></figcaption></figure><iframe style="width: 100%; height: 100px; border: none; position: relative; z-index: 1;" allowtransparency="" allow="clipboard-read; clipboard-write" src="https://narrations.ad-auris.com/widget/the-conversation-canada/what-you-need-to-know-about-canadas-new-first-home-savings-account" width="100%" height="400"></iframe>
<p>Buying a home is becoming <a href="https://macleans.ca/longforms/the-end-of-homeownership/">increasingly challenging for Canadians</a>. But there is a new solution available to help buyers take their first step onto the housing ladder.</p>
<p>As of April, first-time buyers can open a first home savings account (<a href="https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account.html">FHSA</a>). This account is specifically designed to help first-time buyers purchase their first home. </p>
<p>It combines the benefits found in two existing registered accounts: the registered retirement savings plan (<a href="https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/registered-retirement-savings-plan-rrsp.html">RRSP</a>) and the <a href="https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc4466/tax-free-savings-account-tfsa-guide-individuals.html">tax-free savings account</a>.</p>
<p>An FHSA provides a tax shelter for investments, turbo-charging the growth of savings for a home down payment. When a taxpayer contributes to their FHSA, their tax bill is lowered for that year. Additionally, when the funds are withdrawn to buy a first-time home, <a href="https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account/withdrawing-money-from-your-fhsa.html">no tax is owed</a>.</p>
<p>Initially, the federal government said the FHSA could not be combined with the <a href="https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/what-home-buyers-plan.html">Home-Buyers Plan</a>, which lets people borrow from their RRSP to finance a home purchase. This has since changed and taxpayers have been assured <a href="https://www.canada.ca/en/department-finance/news/2022/08/design-of-the-tax-free-first-home-savings-account.html">they can use both programs in combination</a>.</p>
<h2>The finer details</h2>
<p>Is there a catch? Not really, but there are specific rules to follow. To use the FHSA, you must be 18 years of age and can’t have owned a home within the past four years.</p>
<p>Contributions are limited to $8,000 annually, up to $40,000 over a lifetime. The funds to purchase a home must be used within 15 years (or by the time you turn 71).</p>
<p>Many first-time buyers may find it difficult to save $8,000 in a single year. But the good news is you can carry over the contribution room to the following year.</p>
<figure class="align-center ">
<img alt="A person in a hooded jacket and track pants walks their dog on a sidewalk lined with real estate sale signs." src="https://images.theconversation.com/files/535883/original/file-20230705-15-rlvnyi.JPG?ixlib=rb-1.1.0&rect=0%2C50%2C4792%2C3204&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/535883/original/file-20230705-15-rlvnyi.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=408&fit=crop&dpr=1 600w, https://images.theconversation.com/files/535883/original/file-20230705-15-rlvnyi.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=408&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/535883/original/file-20230705-15-rlvnyi.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=408&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/535883/original/file-20230705-15-rlvnyi.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=512&fit=crop&dpr=1 754w, https://images.theconversation.com/files/535883/original/file-20230705-15-rlvnyi.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=512&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/535883/original/file-20230705-15-rlvnyi.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=512&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A person walks past multiple for-sale and sold real estate signs in Mississauga, Ont., on May 24, 2023.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Nathan Denette</span></span>
</figcaption>
</figure>
<p>It’s important to note that the maximum amount you can pay into the FHSA in any year is $16,000. This includes $8,000 from the current year and <a href="https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account/contributing-your-fhsa.html#h_3">$8,000 of the unused from the year prior</a>.</p>
<p>But what if circumstances change and you decide not to purchase a home? Or maybe you do buy a home, and there are funds left over? No worries — you can transfer the funds to your RRSP without impacting your RRSP contribution room.</p>
<h2>Should millennials rejoice?</h2>
<p>Statistics Canada data shows that <a href="https://www150.statcan.gc.ca/n1/daily-quotidien/220921/mc-b001-eng.htm">home ownership has declined from 2011 to 2021</a>, with the greatest decline occurring for <a href="https://www150.statcan.gc.ca/n1/daily-quotidien/220921/dq220921b-eng.htm">millennials ages 25 to 34</a>. </p>
<p>The main challenges to owning a home are high real estate prices, high borrowing costs and the cost of living rising faster than wages (<a href="https://www.thestar.com/business/opinion/2023/06/10/your-paycheque-has-finally-closed-the-gap-with-inflation-a-good-thing-despite-the-bank-of-canadas-opinion.html?rf">though wages are now slowly starting to catch-up</a>). One way to measure this challenge is with the <a href="https://www.bankofcanada.ca/rates/indicators/capacity-and-inflation-pressures/real-estate-market-definitions/">Bank of Canada’s housing affordability index</a>.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/534921/original/file-20230629-27-fp6hqv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A bar graph that increases over time." src="https://images.theconversation.com/files/534921/original/file-20230629-27-fp6hqv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/534921/original/file-20230629-27-fp6hqv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=300&fit=crop&dpr=1 600w, https://images.theconversation.com/files/534921/original/file-20230629-27-fp6hqv.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=300&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/534921/original/file-20230629-27-fp6hqv.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=300&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/534921/original/file-20230629-27-fp6hqv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=377&fit=crop&dpr=1 754w, https://images.theconversation.com/files/534921/original/file-20230629-27-fp6hqv.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=377&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/534921/original/file-20230629-27-fp6hqv.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=377&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">A graph showing the housing affordability index in Canada from 2000 to 2023.</span>
<span class="attribution"><span class="source">(The Bank of Canada)</span></span>
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</figure>
<p>The housing affordability index illustrates how difficult it is to afford a home by measuring housing-related costs (mortgage payments and utility fees) relative to average household disposable income. It has been around 45 to 50 per cent recently — far higher than previous years. </p>
<p>The current index shows that the average household needs to give up approximately half of their disposable income to own a home. So while the FHSA may provide hope for those saving for a down payment for their first home, the ongoing costs remain very high.</p>
<h2>FHSA improves first-time buyers’ chances</h2>
<p>If a first-time buyer is willing to sacrifice a potentially significant part of their monthly income to buy their first home, they first need a down payment. So is the FHSA sufficient to make a difference for first-time buyers trying to save for their down payment?</p>
<p>Some might see the maximum contribution of $40,000 to a FHSA as a drop in the ocean compared to the down payment required for homes in more expensive Canadian markets. In Vancouver, Toronto and Victoria, a 20 per cent down payment for a median home price is <a href="https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/housing-affordability.pdf">$238,471, $227,514, and $204,149</a>, respectively.</p>
<p>A <a href="https://www.royallepage.ca/en/realestate/news/down-payment-dilemma-canadian-first-time-homebuyers-fear-of-falling-short-is-escalating/">recent survey</a> found that 25 per cent of first-time buyers relied on help from parents or relatives with their monthly mortgage payments. Thirty-five per cent needed help with their down payment.</p>
<p>The same survey of first-time buyers found that <a href="https://financialpost.com/real-estate/first-time-homebuyers-worried-afford-down-payments">67 per cent of respondents feared missing out on owning a home</a> due to an inadequate down payment.</p>
<p>However, many first-time buyers start by buying more modest properties initially, and the FHSA could help them get into the housing market earlier. Of course, this will still take time given the $8,000 per year contribution limit. </p>
<p>While the impact of the FHSA won’t be instant, and while it’s not a complete solution, it’s a step in the right direction. For many Canadians, owning a home provides security and a sense of belonging. The FHSA could play a significant role in making this dream more attainable for first-time buyers, helping them reach the moment when they finally get the keys to their own front door.</p><img src="https://counter.theconversation.com/content/208413/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>A new tax-free savings account could play a role in making the dream of home ownership more attainable for first-time buyers in Canada.Stuart Snaith, Associate Professor, Gustavson School of Business, University of VictoriaAlison Jean Parker, Assistant Teaching Professor, Gustavson School of Business, University of VictoriaDouglas A. Stuart, Assistant Teaching Professor, Gustavson School of Business, University of VictoriaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2040602023-05-21T10:11:03Z2023-05-21T10:11:03ZGrand infrastructure projects aren’t a magic bullet for industrial development – insights from Ghana and Kenya<figure><img src="https://images.theconversation.com/files/522146/original/file-20230420-201-3jeqjy.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Kenya Lamu Port Project</span> </figcaption></figure><p>The African Union’s flagship <a href="https://au.int/en/agenda2063/overview">Agenda 2063</a> initiative prioritises <a href="https://au.int/en/infrastructure-energy-development">large-scale infrastructure development</a> and promises to “link the continent by rail, road, sea and air”. </p>
<p>This is being undertaken in parallel with efforts to improve economic integration. In 2021, the 54 countries on the continent made history when they began trading within the <a href="https://au-afcfta.org/about/">African Continental Free Trade Area</a>. It is the largest free trade area in the world.</p>
<p>Proponents of an approach to development that focuses on <a href="https://www.tandfonline.com/doi/full/10.1080/00343404.2019.1661984">infrastructure</a> claim that improving connectivity will foster industrialisation and planned urbanisation. It gives policy makers tools to create well-planned urban regions that can compete in the global economy and attract foreign direct investment. These, in turn, will foster industrial growth. </p>
<p>The argument goes that setting up <a href="https://www.tandfonline.com/doi/full/10.1080/21622671.2022.2092205">development corridors</a>, <a href="https://elibrary.worldbank.org/doi/abs/10.1596/978-0-8213-8638-5">special economic zones</a>, ‘<a href="https://journals.sagepub.com/doi/10.1177/0042098018793032">new cities</a>,’ and drawing up <a href="https://journals.sagepub.com/doi/full/10.1177/0308518X18763370">city master plans</a> will lead to the development of urban spaces that can be ‘plugged in’ to global production networks. This will boost the productivity and competitiveness of African industry. Ultimately African countries will export more high-value manufactured goods rather than natural resources and unprocessed agriculture commodities.</p>
<p><a href="https://www.tandfonline.com/doi/abs/10.1080/03056244.2023.2171284">Our research</a> calls these claims into question. We assessed the impact of transnational development corridor projects in Kenya and Ghana. We found that in both cases, improved connectivity failed to catalyse industrialisation. Instead, it encouraged land speculation as it opened up new spaces to real estate investment.</p>
<p>This is a problem. Failure to trigger industrial growth risks locking Africa into the global economy as an <a href="https://www.tandfonline.com/doi/abs/10.1080/03056244.2015.1084911">exporter of raw materials</a>. On top of this, cities without industry have <a href="https://link.springer.com/article/10.1007/s10887-015-9121-4">higher levels of inequality</a> than their more industrialised counterparts. </p>
<p>We concluded that infrastructure that links mines to ports isn’t enough. It needs to be accompanied by policies that discourage speculation in land, and encourage productive investment in factories that can process raw materials and provide jobs to the continent’s young urban workforce.</p>
<h2>Infrastructure-led development in Africa</h2>
<p>Poor quality infrastructure is a <a href="https://www.tandfonline.com/doi/full/10.1080/00343404.2019.1661984">legacy of neoliberal structural adjustment </a> programmes imposed on African countries by the International Monetary Fund in the 1980s and 1990s. Governments that received these loans were largely prohibited from investing in infrastructure. But private investors showed little interest in building large-scale transnational logistics and energy infrastructure.</p>
<p>The <a href="https://corporatefinanceinstitute.com/resources/economics/2008-2009-global-financial-crisis/">2008 financial crisis</a> changed everything. Many governments responded by <a href="https://www.sciencedirect.com/science/article/pii/S0305750X19300713">reintroducing national development planning</a>. These included <a href="https://www.tandfonline.com/doi/full/10.1080/13563467.2022.2091534">large-scale infrastructure projects</a>. These projects could be financed because low interest rates in advanced-industrial countries meant that borrowing was cheap. </p>
<p>By 2018 <a href="https://www.sciencedirect.com/science/article/pii/S0016718517303299?via%3Dihub">more than 50 development corridors</a> were in various stages of construction across Africa. Many governments were fully committed to infrastructure-led development. Transportation networks and energy grids were expanded at break-neck speed in a <a href="https://www.tandfonline.com/doi/full/10.1080/23792949.2022.2115933">continental competition</a>.</p>
<h2>Case study 1: Ghana</h2>
<p>The <a href="https://highwayabb.ecowas.int/about-the-project/">Abidjan–Lagos Corridor</a> is a project to build a transnational six-lane highway connecting Ghana’s capital, Accra, to Abidjan, Lome, Cotonou and Lagos. </p>
<p>The project was launched in 2014 by the <a href="https://www.afdb.org/fileadmin/uploads/afdb/Documents/Project-and-Operations/Multinational_-_Approved_-_Study_for_the_Abidjan-_Lagos_Corridor_Highway_Development_Project.pdf">Economic Community of West African States</a> with the support of the African Development Bank and African Union. More than 50% of the corridor traverses Ghanaian territory.</p>
<p>The initiative enjoys broad political support in Ghana. Through his <a href="https://www.trade.gov/market-intelligence/ghana-one-district-one-factor-1d1f-initiative">One District One Factory policy</a>, President Nana Akufo-Addo of the National Patriotic Party has sought to support industrialisation across a range of economic sectors, from textiles to pharmaceuticals. He has <a href="https://www.ghanaweb.com/GhanaHomePage/business/Establish-a-management-authority-to-fast-track-implementation-of-Abidjan-Lagos-Corridor-Dev-t-Project-Akufo-Addo-790926">fast-tracked the Corridor project</a> and lobbied to host the management authority of the project. </p>
<p>The highway is the cornerstone of a rapidly urbanising West African ‘<a href="https://www.elgaronline.com/display/edcoll/9781788972697/9781788972697.00021.xml">megacity region</a>’. Real estate projects range from a <a href="https://www.tandfonline.com/doi/full/10.1080/13563475.2019.1664896">planned new city 50km from Accra</a> to unplanned <a href="https://journals.sagepub.com/doi/abs/10.1177/0042098019851949">urban sprawl</a> that extends throughout the corridor.</p>
<p>The corridor has not significantly boosted Ghanaian industrial capacity. <a href="https://stat.unido.org/sdg/GHA">According to UNIDO data</a>, manufacturing accounted for 14% of Ghana’s GDP in 2008. By 2022 this figure had shrunk to a mere 11.8%. It has, however, created opportunities for real estate speculation.</p>
<h2>Case study 2: Kenya</h2>
<p>We found similar results in Kenya. In 2008 the government launched <a href="https://vision2030.go.ke/">Kenya Vision 2030</a>. This targeted a number of key <a href="https://www.tralac.org/images/docs/8097/kenyas-industrial-transformation-programme-2015.pdf">economic sectors</a>. Agro-processing, textiles, leather and construction materials are some of these. The hope was that it would nearly double manufacturing’s share of gross domestic product.</p>
<p>The Kenyan Government went on an infrastructure spending spree. By 2019 Kenya was undertaking more large-scale infrastructure projects than almost <a href="https://www2.deloitte.com/za/en/pages/energy-and-resources/articles/africa-construction-trends.html">any other country in Africa</a>.</p>
<p>Many of these projects are included in the <a href="https://www.lapsset.go.ke/">Lamu Port–South Sudan–Ethiopia Transport Corridor</a>. This is designed to integrate northern Kenya and its surrounding borderlands into a transnational region that boasts world class logistics infrastructure. In addition, the <a href="http://ke.china-embassy.gov.cn/eng/zxyw/201910/t20191028_6817952.htm">Standard Gauge Railway</a> was built to link Mombasa and Nairobi, while a series of road projects around Nairobi were designed to decongest the city centre.</p>
<p>But Kenya’s manufacturing sector has generally disappointed. <a href="https://stat.unido.org/sdg/KEN">According to UNIDO</a> manufacturing value added as a proportion of GDP decreased from 11.8% in 2008 to a 8.9% in 2022.</p>
<p>The infrastructure boom has, however, accelerated urban sprawl and speculation. Investors have rushed in to secure land adjacent to new projects in <a href="https://dlci-hoa.org/assets/upload/investment-in-the-dry-lands-documents/20200804041053648.pdf">Isiolo and Lamu</a>. North of Nairobi, the Thika Superhighway has catalysed a peri-urban real estate boom. For example, international developer Rendeavour is building a <a href="https://www.rendeavour.com/projects/tatu-city/">new city</a> with state-of-the-art amenities for 150,000 residents. </p>
<p>Elsewhere along the highway local landlords have built high-rise tenements to capitalise on the <a href="https://www.iied.org/sites/default/files/pdfs/migrate/10876IIED.pdf">booming low-end rental market</a>.</p>
<h2>What must be done?</h2>
<p>Our findings do not rule out the possibility that infrastructure-led development could drive industrialisation in the future. But they suggest that it must be accompanied by policy that discourages speculation in land and real estate.</p>
<p>Currently, property in many African cities is not taxed, so many elites consider it the ‘<a href="https://onlinelibrary.wiley.com/doi/full/10.1111/1468-2427.12550">safest bet</a>.’ Levying taxes on property would discourage speculation and generate revenue that could be used for public spending. This approach has <a href="https://www.wiley.com/en-gb/Urban+Land+Rent%3A+Singapore+as+a+Property+State-p-9781118827659">worked in East Asian countries</a> that have successfully achieved industrial transformation. </p>
<p>Without this, infrastructure-led development is likely to contribute to further <a href="https://link.springer.com/article/10.1007/s10887-015-9121-4">urbanisation without industrialisation</a>. African governments will be unlikely to achieve their industrial objectives, and remain dependent on exporting natural resources and agricultural goods.</p><img src="https://counter.theconversation.com/content/204060/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Seth Schindler received funding from the Economic and Social Research Council. </span></em></p><p class="fine-print"><em><span>Tom Gillespie received funding from a University of Manchester Hallsworth Research Fellowship and the UK Foreign, Commonwealth and Development Office-funded African Cities Research Consortium. </span></em></p>Infrastructure that links mines to ports isn’t enough – it needs to be accompanied by policies that encourage productive investment in factories.Seth Schindler, Senior Lecturer in Urban Development & Transformation, University of ManchesterTom Gillespie, Lecturer in Global Urban Development, University of ManchesterLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2029602023-04-24T20:05:40Z2023-04-24T20:05:40Z3 sales tactics rife in the real estate industry, and why they work<figure><img src="https://images.theconversation.com/files/520129/original/file-20230411-14-cp2zm8.jpg?ixlib=rb-1.1.0&rect=0%2C907%2C5615%2C2824&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>Buying a home is likely to be the biggest financial transaction you will ever make, and you’re at a distinct disadvantage. You’re an amateur up against professionals – real estate agents – versed in psychological tricks to get you excited about owning a property and paying more than you planned.</p>
<p>These tricks start with comparatively simple things such as making rooms look bigger in adverts by using a wide-angle photography. They extend all the way to the point of sale. </p>
<p>None of these tactics necessarily involve outright lying – there are laws against false and misleading conduct. But they are manipulative, exploiting the fact that humans are emotional beings with many “cognitive biases” – a perception of reality that is more emotional ratther than rational.</p>
<p>The three most common tactics come down to manipulating your confidence in your own decisions. Close to <a href="https://www.worldscientific.com/doi/abs/10.1142/S0217590816500156">80 studies</a> suggest overconfidence is one of the most significant cognitive biases influencing behaviour in the real estate market.</p>
<h2>1. Underquote, entice the bargain hunters</h2>
<p>You see a property in your price range that’s everything you want. You call the agent, inspect the property, then prepare for the auction. It sells for $200,000 more. </p>
<p>Underquoting involves deliberately advertising a property significantly lower than its likely sales price. While the prevalence of the practice is disputed, with industry representatives saying most agents do the right thing, <a href="https://www.theage.com.au/property/news/new-3-8-million-crackdown-on-underquoting-by-victorian-real-estate-agents-20220914-p5bhzq.html">anecdotal evidence</a> points to underquoting being very common. </p>
<p>Underquoting is effective because it attracts more interested buyers and increases the number and intensity of bidding. It exploits two of the most ubiquitous cognitive biases – herd behaviour and irrational exuberance. </p>
<p>More interest doesn’t just increase competition. A real estate agent will communicate that interest to us, confirming our desire in the property is justified. </p>
<p>This tendency to “follow the herd” and imitate others, as US economist Robert Shiller noted in an influential <a href="https://www.jstor.org/stable/2117915">1995 paper</a>, is built on the assumption others have information that justifies their actions. </p>
<p>This helps explain pretty much every stockmarket bubble since <a href="https://theconversation.com/tulip-mania-the-classic-story-of-a-dutch-financial-bubble-is-mostly-wrong-91413">tulipmania in the 17th century</a>, including the <a href="https://lsecentralbanking.medium.com/how-did-herd-behaviour-contribute-to-the-global-financial-crisis-3b0024a4755e">Global Financial Crisis of 2007-8</a> and <a href="https://www.sciencedirect.com/science/article/abs/pii/S1544612318303647">speculation on cryptocurrency</a>. We are emotionally swayed by the decisions of others, assuming their decisions are rational, even when they are not. This is fertile ground for our own decisions to be manipulated.</p>
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<strong>
Read more:
<a href="https://theconversation.com/from-tulips-and-scrips-to-bitcoin-and-meme-stocks-how-the-act-of-speculating-became-a-financial-mania-158406">From tulips and scrips to bitcoin and meme stocks – how the act of speculating became a financial mania</a>
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<h2>2. Hide reality, inflate expectations</h2>
<p>Real estate agents will generally favour auctions to extract the <a href="https://www.domain.com.au/news/selling-at-auction-in-melbourne-earns-vendors-tens-of-thousands-in-extra-cash-1072565/">maximum sales price</a>, for the reasons outlined above and the prospect of <a href="https://www.researchgate.net/publication/220505543_Understanding_auction_fever_A_framework_for_emotional_bidding">auction fever</a> – when carefully decided limits are forgotten in the thrill of the moment. </p>
<p>But that’s not always the case. In a soft market with few buyers, agents may instead opt for a private sale, sometimes called a “<a href="https://attwoodmarshall.com.au/the-silent-auction/">silent auction</a>”. The goal here is to cause you to overestimate the degree of competition and thus make a bigger offer. </p>
<p>An agent might assist this perception by instead supplying you with information from previous public auctions of similar properties more favourable to their preferred narrative.</p>
<p>The value of hiding information also explains why you may come across so many sold listings with <a href="https://www.smh.com.au/property/news/should-you-be-able-to-know-how-much-your-neighbours-sold-their-house-for-20220223-p59z2t.html">labels</a> such as “price not disclosed” or “price withheld.” The reason for this may well be that the property sold for less than hoped.</p>
<p>Hiding information the agent doesn’t want you to think about depends principally on exploiting our cognitive bias towards <a href="https://www.sciencedirect.com/topics/psychology/overconfidence">overconfidence</a> – assuming we are smarter, more knowledgeable or better skilled than we actually are.</p>
<p>In lieu of that negative information, you are more likely to focus on the available information – particularly if it suits what you want to believe. </p>
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<em>
<strong>
Read more:
<a href="https://theconversation.com/when-your-house-has-a-disturbing-history-what-should-buyers-be-told-about-its-past-132766">When your house has a (disturbing) history, what should buyers be told about its ‘past’?</a>
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<h2>3. Talk up nominal gains</h2>
<p>You may have heard the <a href="https://www.smh.com.au/property/news/do-house-prices-really-double-every-10-years-20211203-p59eif.html">old saying</a> that property values double every 10 years. Stressing what a property is likely to be worth in a decade <a href="https://www.realestate.com.au/news/suburbs-you-shouldve-bought-a-home-in-10-years-ago-and-how-much-your-area-has-grown/">based on what it was worth a decade ago</a> can be a powerful motivator to bid more.</p>
<p>As Robert Shiller noted in his 2013 book <a href="https://press.princeton.edu/books/paperback/9780691156323/the-subprime-solution">The Subprime Solution</a> (about the property-buying mania that led to the Global Financial Crisis), homes are such significant investments that we tend to recall their prices from the distant past (unlike, say, like a loaf of bread or bottle of milk).</p>
<p>This tendency results in an unconscious focus on nominal values rather than <a href="https://www.fool.com/investing/general/2012/04/12/the-illusion-of-housing-as-a-great-investment.aspx">real (inflation-adjusted) values</a>. This cognitive bias is known as the <a href="https://www.emerald.com/insight/content/doi/10.1108/14635789810212931/full/html">money illusion</a>, a mental miscalculation that may increase your willingness to pay more for the property. </p>
<h2>In conclusion…</h2>
<p>There’s a case for laws to <a href="https://www.realestate.com.au/news/push-to-end-home-sale-price-confusion-in-victorian-property-industry-review/">increase transparency</a> and the accuracy of information available in the real estate market. </p>
<p>But in the meantime, if you’re buying a home, it’s wise to acknowledge your limitations. Do your homework, seek out independent advice and even consider hiring a professional advocate with the knowledge and experience to balance emotional and rational thoughts.</p><img src="https://counter.theconversation.com/content/202960/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Peyman Khezr does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Overconfidence and other cognitive biases help to drive up real estate prices. Here are three techniques used by real estate agents to exploit those biases.Peyman Khezr, Senior Lecturer in Economics and Director of Behavioural Business Lab, RMIT UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2016242023-04-02T11:46:40Z2023-04-02T11:46:40ZRenters have stepped up efforts to address the housing crisis — it’s time for property managers to do the same<figure><img src="https://images.theconversation.com/files/517055/original/file-20230322-1452-4bgiik.jpg?ixlib=rb-1.1.0&rect=31%2C0%2C5249%2C3436&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Renters and property managers both have mutual responsibilities in times of financial crisis.</span> <span class="attribution"><span class="source">THE CANADIAN PRESS/Jonathan Hayward</span></span></figcaption></figure><p>Three years ago, at the onset of the COVID-19 pandemic, I published <a href="https://theconversation.com/distinguishing-between-wants-and-needs-during-the-coronavirus-pandemic-135656">an article on what it means to prioritize needs over wants</a> in times of economic crisis. </p>
<p><a href="https://psycnet.apa.org/doi/10.1037/h0054346">Maslow’s hierarchy of needs</a> shows that the most fundamental needs are physiological and required for survival. These needs include health, food, water and shelter. On the other hand, wants are non-essentials, such as fashion items, travel, entertainment and gourmet food.</p>
<p><a href="https://www.bls.gov/opub/btn/volume-3/how-does-consumer-spending-change-during-boom-recession-and-recovery.htm">Historical data shows</a> that people typically understand the difference between wants and needs. People are usually smart with their money in recessions or times of market uncertainty.</p>
<p>Specifically, the data found that people and families eat more meals at home and defer large purchases in order to make rent or mortgage payments.</p>
<p>With Canada in the midst of a <a href="https://theconversation.com/new-study-reveals-intensified-housing-inequality-in-canada-from-1981-to-2016-173633">housing affordability crisis</a>, I decided to revisit the topic of renter needs, wants and housing outcomes. </p>
<p>As a <a href="https://www.uregina.ca/business/faculty-staff/faculty/wilson-grant.html">business and economics researcher</a>, I wanted to explore the consumer spending patterns of renters in the new economic crisis of <a href="https://www.bnnbloomberg.ca/canada-s-higher-interest-rates-cause-borrowers-pain-1.1891637">high interest rates</a>, <a href="https://www.forbes.com/sites/pamdanziger/2023/03/12/consumers-resilience-has-reached-the-breaking-point-one-trillion-dollars-worth/">staggering inflation</a> and <a href="https://www.cnbc.com/2023/03/17/here-are-all-9-stocks-we-bought-this-week-during-the-bank-driven-market-volatility-.html">financial market volatility</a>. </p>
<p>Renters and property managers both have mutual responsibilities in times of financial crisis. Renters must make careful spending decisions and do all they can to pay their rent. At the same time, property managers should focus on understanding occupants’ needs in order to cater to them.</p>
<h2>New study on tenants and landlords</h2>
<p>With my co-authors <a href="https://www.avenuelivingam.com/team/gabriel-millard/">Gabriel Millard</a> and <a href="https://www.avenuelivingam.com/insights/the-reading-and-listening-list-our-favourite-books-and-podcasts-of-2022/">Cameron Hills</a>, executives of <a href="https://www.avenuelivingam.com/">one of Canada’s largest property owner-operators, Avenue Living</a>, we examined the spending habits of renters and the rental strategies of property managers in the United States, the United Kingdom and Canada.</p>
<p>Our research, published in the real estate economics journal <a href="https://doi.org/10.1108/PM-10-2022-0082"><em>Property Management</em></a>, involved a multi-national study of 1,251 renters. Our results showed that consumers were successfully prioritizing needs over wants, but many were still struggling financially.</p>
<p>According to the Canada Mortgage and Housing Corporation, housing is deemed affordable if it costs <a href="https://www.avenuelivingam.com/insights/economically-problematic-an-empirical-examination-of-cmhcs-affordability-program-for-existing-rental-housing-stock/">less than 30 per cent of a household’s pre-tax income</a>. Over half of the renters who were surveyed across different properties indicated they lived in unaffordable rental accommodations.</p>
<p>These same renters consciously made decisions to spend less in almost every other expense category, including food, transportation, entertainment and clothing. Although consumers were making smart financial decisions, many were still struggling with affordability. This is deeply concerning.</p>
<h2>Property managers are key</h2>
<p>Our research showed that renters were already doing their part to deal with the rising cost of living by prioritizing their needs over wants. But despite their efforts, housing affordability still remained outside their control. This is where property managers come in — they must also do their part to address the affordability crisis.</p>
<p>Our research makes a compelling case for why property managers should try to accommodate the needs of their tenants. We found that customer-oriented property managers — <a href="https://www.jstor.org/stable/1251757">those who sought to understand the needs of their tenants and acted accordingly</a> — were more successful than those that didn’t.</p>
<p>Property managers who attempted to accommodate renters — with alternative rent payment dates, integrated services and commitments to creating safe accommodations, to name a few — had better tenants. These tenants had greater loyalty, higher trust, elevated pride in their rental units and stronger commitments to paying rent on time. </p>
<p>Simply put, property managers who truly cared about their tenants’ needs ended up with better tenants.</p>
<figure class="align-center ">
<img alt="A man shows a laptop screen to a couple sitting at the same table as him" src="https://images.theconversation.com/files/517058/original/file-20230322-2102-f1b42c.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/517058/original/file-20230322-2102-f1b42c.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/517058/original/file-20230322-2102-f1b42c.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/517058/original/file-20230322-2102-f1b42c.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/517058/original/file-20230322-2102-f1b42c.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/517058/original/file-20230322-2102-f1b42c.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/517058/original/file-20230322-2102-f1b42c.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A new study has found that landlords who seek to understand the needs of their tenants are more successful than those that didn’t.</span>
<span class="attribution"><span class="source">(Shutterstock)</span></span>
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</figure>
<h2>The road ahead</h2>
<p>For many Canadians, the dream of home ownership has been deferred. <a href="https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=1810020501">Home prices remain high</a>, current interest rates make monthly <a href="https://www.avenuelivingam.com/insights/white-paper-re-examining-a-hedge-against-inflation-multi-family-residential-real-estate/">mortgage payments significantly larger</a>, increased credit score requirements make it <a href="https://www.scotiabank.com/ca/en/personal/advice-plus/features/posts.what-credit-score-do-you-need-to-buy-a-house-in-canada.html">more difficult for new mortgage approvals</a> and inflation <a href="https://www.imf.org/en/Publications/fandd/issues/Series/Back-to-Basics/Inflation">is reducing everyone’s purchasing power</a>. </p>
<p>As a result, there is an increased need for rental housing in Canada, especially affordable rentals. In order for Canada to overcome the housing affordability crisis, individuals, families, the real estate industry and governments all need to work together. </p>
<p>Renters and property managers must each do their part. Renters should continue to prioritize needs over wants, while property managers should try to cultivate good tenants by being customer-oriented. Good tenants are those who are loyal, trusting and committed.</p>
<p>The real estate industry must also invest in affordable housing initiatives and existing rental stock. There is <a href="https://www.cmhc-schl.gc.ca/en/data-and-research/data-tables/rental-market">significant and sustained demand for rental accommodation in Canada</a>. Residents are price-sensitive and will always seek out economical alternatives; the industry should reflect this by building more affordable housing. </p>
<p>Finally, governments, organizations and policymakers need to continue focusing and investing in affordable housing initiatives. Commitments to affordable and sustainable housing initiatives <a href="https://premium.wealthprofessional.ca/ca-roundtable-breathing-new-life-into-canadas-housing-supply/p/1">have been made by Canada Infrastructure Bank</a> and the <a href="https://www.cbc.ca/news/canada/saskatchewan/regina-affordable-rapid-housing-1.6747208">Canada Mortgage and Housing Corporation</a>, but more work needs to be done.</p><img src="https://counter.theconversation.com/content/201624/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Grant Alexander Wilson has received research funds and consulted for Avenue Living Asset Management.
</span></em></p>In order for Canada to overcome the housing affordability crisis, individuals, families, the real estate industry and government all need to work together.Grant Alexander Wilson, Assistant Professor, Hill and Levene Schools of Business, University of ReginaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2014792023-03-19T12:18:51Z2023-03-19T12:18:51ZWars in cities: three rules for protecting the built environment during conflict<figure><img src="https://images.theconversation.com/files/514768/original/file-20230311-2791-i5k8dp.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">This is a digitally generated image of what a city might look like after a war.</span> <span class="attribution"><span class="source">Getty Images</span></span></figcaption></figure><p>During the course of wars, the infrastructure of cities faces destruction. Fighting, regardless of its intentions, destroys roads, bridges, commercial and residential buildings, as well as the architecture they embody.</p>
<p>Throughout history and around the globe, calls to stop wars have focused on the value of people’s lives. In recent decades, there has been a lot of attention paid to protecting cultural heritage. However, there has been little consideration for the value of public places and people’s memories of these spaces.</p>
<p>Buildings – such as residential and commercial structures, schools and hospitals – are often destroyed in the chaos of conflict, leaving behind psychological trauma that can last for generations. In a recent paper, we set out why cities and their buildings need to be protected. This infrastructure, unique or not, represents people’s history, culture and social fabric. </p>
<p>In our <a href="https://www.tandfonline.com/doi/abs/10.1080/17549175.2023.2180076?src=&journalCode=rjou20">paper</a>, we coined the term “wartime urbanism” to describe what we believe needs to be done to preserve a city’s distinctive characteristics in times of conflict. </p>
<p>We propose three ways to do this: mapping a city’s real estate development and its relative urban value; enacting national and international laws that criminalise the destruction of physical assets; and raising public awareness about these laws and the importance of city assets.</p>
<p>During times of conflict, cultural heritage and city places can be protected <a href="https://theconversation.com/africas-wars-are-hurting-its-rich-heritage-how-the-law-can-help-180041">under various laws</a>. However, for these laws to be effective, governments must implement them during periods of peace.</p>
<p>We argue that politicians and urban practitioners should incorporate wartime urbanism into city planning and design. This would help protect buildings, infrastructure, services, facilities, and public and private places before, during and after wars. The less severe the material damage (in terms of human lives and physical structures) from conflict, the faster reconciliation can be.</p>
<h2>Protection from destruction</h2>
<p>Conflicts in different parts of the world have caused the displacement of millions of people, and the destruction of hundreds of thousands of buildings and critical infrastructure. When wars intensify, the protection of people is rightly prioritised. Protecting places, however, rarely finds mention.</p>
<p>Wars and the destruction they cause are considered <a href="https://www.un.org/en/genocideprevention/crimes-against-humanity.shtml">crimes against humanity</a>. Prosecution for such crimes is most often enforced by international courts, like The Hague’s <a href="https://www.icc-cpi.int/about/the-court">International Criminal Court</a>. However, several countries have listed crimes against humanity under their domestic laws.</p>
<p>But there is more that can be done. For instance, the 1945 <a href="https://www.un.org/en/about-us/un-charter#:%7E:text=The%20Charter%20of%20the%20United,force%20on%2024%20October%201945.">United Nations Charter</a>, which lists the actions the organisation can take on a variety of issues, doesn’t include the protection of human property. </p>
<p>The 1972 <a href="https://whc.unesco.org/en/convention/#:%7E:text=The%20Convention%20concerning%20the%20Protection%20of%20World%20Cultural%20and%20Natural,the%20Cultural%20and%20Natural%20Heritage.">Convention on the Protection of Cultural and Natural Heritage</a> provides guidelines on securing sites of significant global value. These sites are part of everyday human heritage, and destroying them during peacetime is a crime punishable by law. </p>
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Read more:
<a href="https://theconversation.com/ethiopias-war-in-tigray-risks-wiping-out-centuries-of-the-worlds-history-179829">Ethiopia's war in Tigray risks wiping out centuries of the world's history</a>
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<p>However, during war, everything is exposed to extreme destruction. Aggressors often seek to cause irreversible damage to the history and civilisation of the country under attack. If not by genocide, then by destroying people’s homes, memorials and valuable architectural assets. This was seen in <a href="https://theconversation.com/ethiopias-war-in-tigray-risks-wiping-out-centuries-of-the-worlds-history-179829">Ethiopia’s Tigray region</a> during the 2020-2022 war.</p>
<p>Urban planners can play a role in guiding <a href="https://whc.unesco.org/en/activities/811/">urban conservation and preservation</a> of city places by creating detailed plans that identify the assets that need to be protected – and how they can be protected. They can also develop strategies that mitigate the damage of war by focusing on how to rebuild in the aftermath.</p>
<h2>Three rules of wartime urbanism</h2>
<p>Wartime urbanism emphasises the importance of protecting cities or public places, regardless of their structure. This approach means professionals in architecture, urban planners and urban designers should develop plans that address the possibility of regional, global and international-level conflicts. </p>
<p>To protect city places from the destruction of war – or to restore and rebuild them to normal after a conflict ends – we propose three rules.</p>
<p><strong>1. Pre-documentary mapping</strong></p>
<p>Specialists in architecture and urban planning prepare maps that detail the development of a city, town or urban space. These maps should be kept in safe places physically and virtually. Should a war break out, developers can use these maps to rebuild infrastructure and restore city functions destroyed by conflict. This would help ensure that a city goes back to what it was, which would help minimise people’s psychological trauma. </p>
<p>These maps also preserve invaluable information about a city’s history and culture that can be used to inform future development and restoration projects. Because such maps document city assets, they can be used by international protection agencies to better measure the scale of destruction caused by war. They can also help identify areas of potential conflict – or spaces at risk of being targeted. Maps can further be used to advocate the rights of local populations when rebuilding after war. </p>
<p><strong>2. Criminalising destruction</strong></p>
<p>The <a href="https://www.un.org/en/our-work/maintain-international-peace-and-security#:%7E:text=Preventive%20Diplomacy%20and%20Mediation&text=The%20United%20Nations%20plays%20an,political%20missions%20in%20the%20field.">United Nations</a> and <a href="https://www.unesco.org/en/articles/odesa-inscribed-unescos-world-heritage-list-face-threats-destruction?hub=66116">Unesco</a> should add an item to their charters that states that ordinary buildings within a city should not be targeted and destroyed. This would give such buildings the same degree of importance as architecture and cultural artefacts. It would help rally people around protecting ordinary structures, and help reduce the risk of displacement and displacement-related poverty. </p>
<p><strong>3. Raising public awareness</strong></p>
<p>Educational institutions and the media need to raise public awareness on the impacts of war. Conflict not only affects lives, but places too. Destroying people’s homes, for instance, exacerbates poverty and trauma. </p>
<p>Public awareness efforts should also highlight laws around crimes against humanity, and other international and local statutes that punish those who sabotage the structure of cities. This would help deter aggressors from attacking infrastructure, and give citizens a <a href="https://www.dw.com/en/civil-war-to-blame-for-surge-in-online-sales-of-ethiopian-artifacts/a-61069797">greater understanding</a> of the importance of their physical spaces. </p>
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Read more:
<a href="https://theconversation.com/africas-wars-are-hurting-its-rich-heritage-how-the-law-can-help-180041">Africa's wars are hurting its rich heritage: how the law can help</a>
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<p>By following these three rules, politicians and citizens can work together to preserve their cities. This would help reduce the time and money spent on rebuilding what wars destroy.</p><img src="https://counter.theconversation.com/content/201479/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Abeer Elshater is now affiliated with Ministry of Higher Education and Scientific Research, Egypt and on temporary leave from Ain Shams University, Cairo, Egypt.</span></em></p><p class="fine-print"><em><span>Hisham Abusaada does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Urban spaces are a repository of people’s beliefs, memories and collective conscience.Hisham Abusaada, Professor of Architecture and Urban Design, Housing and Building National Research CenterAbeer Elshater, Professor of Urban Morphology, Ain Shams UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1973982023-01-12T19:17:21Z2023-01-12T19:17:21ZStamp duty isn’t going anywhere until we agree on what will replace it<figure><img src="https://images.theconversation.com/files/504155/original/file-20230112-22-hy66br.png?ixlib=rb-1.1.0&rect=492%2C258%2C3280%2C1455&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>Nearly all economists and most politicians seem to agree stamp duty is a bad tax. But nearly all state and territory governments rely on it to keep the lights on.</p>
<p>It’s a bad tax because it taxes homeowners every time they move, merely because they have moved. At A$40,000 per move on a median-priced home in Sydney or Melbourne, it’s enough to dissuade people from moving for a better job or to a bigger or smaller home when they have children or their children move out. </p>
<p>It’s even a de facto tax on divorce. When a family home is sold to allow assets to be split, each member of the separating couple needs to pay stamp duty to purchase again. It’s a big reason more than half of <a href="https://grattan.edu.au/news/levelling-the-playing-field-its-time-for-a-national-shared-equity-scheme/">divorced women</a> who lose their homes don’t buy again within a decade. </p>
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Read more:
<a href="https://theconversation.com/axing-stamp-duty-is-a-great-idea-but-nsw-is-doing-it-wrong-150629">Axing stamp duty is a great idea, but NSW is doing it wrong</a>
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<p>And it’s unfair. Stamp duty hits most the younger households that move around the most. It leaves alone the older residents who stay put.</p>
<p>New modelling by the Centre for Policy Studies at Victoria University finds abolishing stamp duty and replacing the revenue lost with land tax would put downward pressure on the price paid by buyers of about <a href="https://theconversation.com/swapping-stamp-duty-for-land-tax-would-push-down-house-prices-but-push-up-apartment-prices-new-modelling-finds-184381">4.7%</a>, and downward pressure on the price received by sellers of about 0.1%.</p>
<p>In 2018 the Grattan Institute found a national shift from stamp duties to land tax would add up to <a href="https://grattan.edu.au/report/state-orange-book-2018/">$17 billion per year</a> to gross domestic product.</p>
<h2>Most states aren’t really removing stamp duty</h2>
<p>So far only one state or territory – the <a href="https://www.revenue.act.gov.au/tax-reform">Australian Capital Territory</a> – has really taken the plunge. Others are merely tinkering with stamp duty in order to create what amounts to a de-facto first home-buyer grant. </p>
<p>The ACT is halfway through a genuine switchover designed to take 20 years.</p>
<p>In Victoria, the Andrews government is merely expanding a system of exemptions for eligible first home-buyers already available. NSW, Queensland, Western Australia and Tasmania also offer such exemptions. </p>
<p>Now in the lead-up to the March election, the NSW government and opposition are <a href="https://www.smh.com.au/politics/nsw/nsw-labor-to-abolish-stamp-duty-for-first-home-buyers-20230108-p5cb40.html">one-upping</a> each other with competing policies to offer even more first home-buyers a way to avoid paying stamp duty. </p>
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Read more:
<a href="https://theconversation.com/stamp-duty-is-an-economic-drag-heres-how-to-move-to-a-better-system-141777">Stamp duty is an economic drag. Here's how to move to a better system</a>
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<p>The NSW Labor opposition pledged to abolish stamp duty altogether for first home buyers purchasing properties worth up to <a href="https://www.abc.net.au/news/2023-01-09/nsw-labor-stamp-duty-policy-for-2023-election/101835720">$800,000</a> — expanding the current exemption which is for homes worth up to $650,000. First home buyers purchasing more expensive homes worth up to $1 million will be offered a discount. </p>
<p>The Coalition government has already legislated to offer first home buyers the option of paying an annual land tax rather than stamp duty if they buy a property worth up to <a href="https://www.nsw.gov.au/initiative/first-home-buyer-choice">$1.5 million</a>.</p>
<p>By targeting these exemptions to first home-buyers, both sides of NSW politics and other state governments are undercutting the key benefit of removing stamp duty: removing the tax on moving. </p>
<p>Most of these policies – including the two offered in NSW – amount to little more than first home buyers’ grants. History shows such grants <a href="https://www.pc.gov.au/inquiries/completed/housing-homelessness/report/housing-homelessness.pdf">tend to push up prices</a>. </p>
<h2>Actually axing stamp duty means replacing it with something</h2>
<p>Stamp duty is critical to helping state governments pay the bills. All states or territories, except the ACT, use them to collect at least one-fifth of their tax revenue. </p>
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<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/504146/original/file-20230112-5012-r50p2j.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/504146/original/file-20230112-5012-r50p2j.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/504146/original/file-20230112-5012-r50p2j.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=344&fit=crop&dpr=1 600w, https://images.theconversation.com/files/504146/original/file-20230112-5012-r50p2j.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=344&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/504146/original/file-20230112-5012-r50p2j.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=344&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/504146/original/file-20230112-5012-r50p2j.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=433&fit=crop&dpr=1 754w, https://images.theconversation.com/files/504146/original/file-20230112-5012-r50p2j.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=433&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/504146/original/file-20230112-5012-r50p2j.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=433&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Does not include Commonwealth grants.</span>
<span class="attribution"><span class="source">Grattan analysis of each state or territory's most recent budget</span></span>
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<p>These revenues pay to keep our hospitals running and schools open. </p>
<p>NSW expects to collect around <a href="https://images.theconversation.com/files/504158/original/file-20230112-27936-b31ru3.PNG">$10 billion</a> in stamp duty this financial year alone.</p>
<p>In contrast, Labor’s NSW giveaway for first-home buyers will cost <a href="https://www.abc.net.au/news/2023-01-09/nsw-labor-stamp-duty-policy-for-2023-election/101835720">$722 million</a> in its first three years. The Coalition’s will cost <a href="https://www.treasury.nsw.gov.au/sites/default/files/2022-11/LANDMARK-FIRST-HOME-BUYER-REFORM-NOW-UP-AND-RUNNING_0.pdf">$728 million</a> over four years.</p>
<p>To really get rid of stamp duty altogether, we need to replace it with something else. Land tax is a good candidate because it <a href="https://theconversation.com/finding-the-losers-and-surprising-winners-from-phasing-out-stamp-duty-154935">doesn’t distort people’s decisions</a>.</p>
<p>Whereas homeowners can avoid paying stamp duty again by refusing to move, land can’t be moved, meaning land tax can’t be avoided.</p>
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Read more:
<a href="https://theconversation.com/killing-off-stamp-duty-a-good-policy-that-no-politician-supports-38536">Killing off stamp duty: a good policy that no politician supports</a>
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<p>The NSW Coalition government started with <a href="https://www.afr.com/policy/economy/perrottet-grilled-over-inherently-terrible-stamp-duty-20211104-p5960p">bolder plans</a> for a meaningful transition, until a <a href="https://www.abc.net.au/news/2022-11-10/stamp-duty-legislation-passes-nsw-parliament/101640982">scare campaign</a> and the opposition from Labor and the Greens forced it to wind it back.</p>
<p>This has left NSW Labor in the unfortunate position of being against the bad tax (stamp duty) but also against the good tax that would have to replace it: land tax. </p>
<p>Other options – such as increasing the goods and services tax to cover the cost of abolishing stamp duty – appear even less likely.</p>
<p>NSW is stuck in a quagmire in which stamp duty seems here to stay. </p>
<h2>Only the ACT is showing the way</h2>
<p>The Australian Capital Territory’s approach of slowly reducing one tax while slowly increasing the other shows it can be done.</p>
<p>After announcing the switchover in 2012, the then treasurer Andrew Barr was reelected as chief minister in 2016 and in 2020.</p>
<p>He is ahead in the race to actually remove stamp duty by replacing it with something. He is showing the rest of Australia it needn’t be afraid.</p><img src="https://counter.theconversation.com/content/197398/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The Grattan Institute began with contributions to its endowment of $15 million from each of the Federal and Victorian Governments, $4 million from BHP Billiton, and $1 million from NAB. In order to safeguard its independence, Grattan Institute's board controls this endowment. The funds are invested and contribute to funding Grattan Institute's activities. Grattan Institute also receives funding from corporates, foundations, and individuals to support its general activities, as disclosed on its website.</span></em></p><p class="fine-print"><em><span>Brendan Coates does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Neither NSW Labor nor the NSW Coalition is actually proposing to axe stamp duty. Neither are any of the other states or territories, apart from the ACT.Joey Moloney, Deputy Program Director, Economic Policy, Grattan InstituteBrendan Coates, Program Director, Economic Policy, Grattan InstituteLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1892852022-12-20T22:18:24Z2022-12-20T22:18:24ZSmart buildings: What happens to our free will when tech makes choices for us?<figure><img src="https://images.theconversation.com/files/481358/original/file-20220826-14-d0tvbm.jpg?ixlib=rb-1.1.0&rect=10%2C8%2C988%2C389&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A so-called smart building. What will become of our free will when choices are made for us by technology embedded in the building?
</span> <span class="attribution"><span class="source">(Shutterstock)</span></span></figcaption></figure><p>Smart buildings, which are central to the concept of smart cities, are a <a href="https://www.cushmanwakefield.com/en/united-kingdom/insights/smart-buildings">new generation of buildings</a> in which technological devices, such as sensors, are embedded in the structure of the buildings themselves. Smart buildings promise to personalize the experiences of their occupants by using real-time feedback mechanisms and forward-looking management of interactions between humans and the built environment.</p>
<p>This personalization includes continuous monitoring of the activities of occupants and the use of sophisticated profiling models. While these issues spark concerns about privacy, this is a matter of not seeing the forest for the trees. The questions raised by the massive arrival of digital technologies in our living spaces go far beyond this.</p>
<p>As a professor of real estate at ESG-UQAM, I specialize in innovations applied to the real estate sector. My research focuses on smart commercial buildings, for which I am developing a conceptual framework and innovative tools to enable in-depth analysis in the context of smart cities.</p>
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À lire aussi :
<a href="https://theconversation.com/get-ready-for-the-invasion-of-smart-building-technologies-following-covid-19-168646">Get ready for the invasion of smart building technologies following COVID-19</a>
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<h2>“Choices” proposed, or imposed</h2>
<p>Thanks to <a href="https://www.btb.termiumplus.gc.ca/tpv2alpha/alpha-eng.html?lang=eng&i=1&srchtxt=ubiquitous+computing&codom2nd_wet=1#resultrecs">ubiquitous computing</a>, interactions between building occupants and nested technology are quiet and invisible. As a result, the occupants’ attention is never drawn to the massive presence of computers operating permanently in the background.</p>
<p>Personalization allows us, for example, to have the ideal temperature and brightness in our workspace at all times. This would be idyllic if this personalization did not come at a cost to the occupants, namely their freedom of action and, more fundamentally, their free will.</p>
<p>As technology increasingly mediates our experiences in the built environment, choices will be offered to us, or even imposed on us, based on the profile the building’s technology device models have created of us in function of the goals, mercantile or otherwise, of those who control them (such as technology companies).</p>
<p>Having the ability to decide either to do something or not, and to act accordingly, is a basic definition of freedom. Smart buildings challenge this freedom by interfering with our ability to act, and more fundamentally, with our ability to decide for ourselves. Is freedom of action even possible for the occupants of a building where interactions between humans and their built environment are produced using algorithms that are never neutral?</p>
<h2>Satisfied… but not free</h2>
<p>The 17th-century English philosopher <a href="https://plato.stanford.edu/entries/locke/">John Locke’s</a> famous analogy of the locked room sheds light on this question. Suppose a sleeping man is transported to a room where, upon awakening, he is engaged in activities that bring him great satisfaction, such as chatting with a long-lost friend.</p>
<p>Unbeknown to him, the door of the room is locked. Thus, he cannot leave the room if he wants to. He is therefore not free, even though he voluntarily remains in the room and gets extreme satisfaction from what he is doing there.</p>
<p>Locke’s analysis reflects the situation of smart building occupants. They benefit from the personalization of their experiences from which they derive great satisfaction. However, once they enter a space, technology controls their interactions outside of their awareness. While they may want to stay in the building to enjoy personalized experiences, they are not free. Smart buildings are a high-tech version of Locke’s locked room.</p>
<p>There’s nothing new about the problem. Already in the 19th century, in <em>Notes from the Underground</em> the Russian Fyodor Dostoyevsky identifies the challenges that computational logic poses to free will.</p>
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<p>You will scream at me … that no one is touching my free will, that all they are concerned with is that my will should of itself, of its own free will, coincide with my own normal interests, with the laws of nature and arithmetic. Good heavens, gentlemen, what sort of free will is left when we come to tabulation and arithmetic…?</p>
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<h2>Deciding on the role of technology in our living spaces</h2>
<p>Indeed, what can be said about our free will when choices are made for us by technology?</p>
<p><a href="https://plato.stanford.edu/entries/locke-freedom/">An action is something we do actively</a>, as opposed to things that happen to us in a passive way. Also, the active will to perform an action differs from the passive desire for an act to be done.</p>
<p>While algorithms are concerned with the predictability of human behaviour, things happen passively to the occupants of smart buildings. Their role is limited to receiving stimuli whilst the invisibility of the technology maintains their illusion that they have sole control over their actions.</p>
<p>These human-built environment interactions erode our will to take action, replacing it with desires shaped and calibrated by models over which we have no control. By denying the free will of their occupants, smart buildings challenge the right to action that the German philosopher <a href="https://hac.bard.edu/amor-mundi/everything-is-fragile-reading-arendt-in-the-anthropocene-2020-01-02">Hannah Arendt</a> defines as one of the most fundamental rights of humans, the one that differentiates us from animals.</p>
<p>So, should we prohibit, or at least regulate, the technology embedded in smart buildings?</p>
<p>The answer to this question takes us back to the very origins of Western democracy. Long before the Big Tech companies (<a href="https://www.investopedia.com/terms/g/gafam-stocks.asp">GAFAM</a>), the Greek Socrates (who died in 399 BC) was concerned with the nature of an ideal city. In Plato’s <a href="https://iep.utm.edu/republic/"><em>The Republic</em></a>, Socrates explains that the difference between a city where citizens have all the luxuries and a city without luxuries, which he calls “a city fit for pigs,” is the ability of the residents of the former to choose their way of life, unlike the residents of the latter where this choice is simply not possible.</p>
<p>Smart cities are the digital version of the luxury cities of antiquity. However, without granting their residents the ability to make informed choices about technology, they provide satisfaction at the expense of their rights.</p>
<p>To avoid building an entire environment according to <a href="https://www.ipl.org/essay/It-Is-Better-To-Be-A-Human-P3FJWSK6JE8R">the philosophy of pigs</a>, smart building occupants should retain the <a href="https://www.researchgate.net/publication/361924759_On_the_Economic_Nature_of_Behavioural_Control_in_Smart_Real_Estate">legally defined right</a> to decide for themselves the role of technology in their living spaces. Only then can their freedom be respected.</p><img src="https://counter.theconversation.com/content/189285/count.gif" alt="La Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Patrick Lecomte ne travaille pas, ne conseille pas, ne possède pas de parts, ne reçoit pas de fonds d'une organisation qui pourrait tirer profit de cet article, et n'a déclaré aucune autre affiliation que son organisme de recherche.</span></em></p>Having the ability to decide either to do something or not, and to act accordingly, is a basic definition of freedom. Smart buildings challenge this freedom.Patrick Lecomte, Professor, Real Estate, Université du Québec à Montréal (UQAM)Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1966852022-12-19T16:42:43Z2022-12-19T16:42:43ZIs the global housing market about to crash?<figure><img src="https://images.theconversation.com/files/501349/original/file-20221215-23-1uaap1.jpg?ixlib=rb-1.1.0&rect=62%2C0%2C6917%2C4732&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A UBS report placed Munich in the top four of its Global Real Estate Bubble Index locations for 2022. </span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/fr/image-photo/munich-alps-panorama-786988819">Shutterstock</a></span></figcaption></figure><p>Amid all the current geopolitical conflicts and economic events, investors are watching the real estate market with bated breath. If recent headlines around the world are anything to go by, they are right to do so. With prices down by 15% from their peak, <a href="https://www.bloomberg.com/news/articles/2022-12-12/sweden-s-free-falling-property-market-triggers-worst-slump-in-eu">Sweden’s housing market</a> is said to be in “free fall”. <a href="https://www.cnbc.com/2022/12/05/germanys-housing-market-is-ripe-for-a-serious-price-correction-economists-warn.html">Germany’s could nosedive by 25%</a> from peak to trough. Meanwhile, the foundations of the world’s most expensive market, in Hong Kong, are <a href="https://www.cnbc.com/2022/12/07/hong-kong-home-prices-plummet-to-five-year-lows-and-could-drop-further.html">starting to wobble</a>.</p>
<p>So, are we headed toward the next global housing market crash, or merely riding a cyclical fluctuation more typical of the real estate market?</p>
<h2>Reasons to worry</h2>
<p>Housing market crashes typically follow real estate bubbles. A real estate bubble is to be understood as a situation in which the average price of a house is much higher than its value based on price-building fundamentals. The 2007 housing crash was one prominent example of when a bubble – here, created by overly permissive mortgage policies adopted in the late 1990s – finally went <em>pop</em>. Economic recessions can also push the housing market over the edge.</p>
<p>As it stands, a number of indicators are in the red. Following the recession caused by the pandemic, consumers are now having to grapple with inflation and shrinking household budgets. In response, central banks around the world have hiked interest rates. In Germany, for example, rates for 10-year loans rose to 3.5% in September. They are now heading toward <a href="https://www.rohmert-medien.de/wp-content/uploads/2022/10/Der-Immobilienbrief-Nr-537.pdf">4% and possibly beyond</a>. In the United States, the <a href="https://www.statista.com/statistics/1302978/monthly-average-interest-rate-on-new-mortgage-loans-in-france/">average interest rate for a 30-year mortgage</a> exceeds 6.8%. The United Kingdom’s 10-year mortgage rate is currently fixed at around 4.21%, up from 2.4% in <a href="https://www.statista.com/statistics/386301/uk-average-mortgage-interest-rates/">September 2020</a>. At 4%, fixed interest rates for 10 years in the Netherlands are at their <a href="https://nltimes.nl/2022/10/03/mortgage-interest-rates-near-highest-point-eight-years">highest point since 2014</a>.</p>
<p>There are exceptions, however. Take France. Although the current European Central Bank (ECB) key interest rate is fixed at 2.5%, the national interest rate for a loan longer than one year is currently at 1.58%, due to a legal cap on real estate loans. This means that interest rates in the country are only rising with a time lag and do not depend solely on current market developments, such as in the United States or Germany, despite the latter also falling under the <a href="https://www.handelsblatt.com/finanzen/immobilien/bauzinsen-warum-immobilienfinanzierung-in-frankreich-noch-guenstig-ist/28760424.html">ECB’s monetary policy</a>.</p>
<h2>… and be reassured</h2>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/501665/original/file-20221217-21-rfmj1m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/501665/original/file-20221217-21-rfmj1m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=114&fit=crop&dpr=1 600w, https://images.theconversation.com/files/501665/original/file-20221217-21-rfmj1m.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=114&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/501665/original/file-20221217-21-rfmj1m.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=114&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/501665/original/file-20221217-21-rfmj1m.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=143&fit=crop&dpr=1 754w, https://images.theconversation.com/files/501665/original/file-20221217-21-rfmj1m.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=143&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/501665/original/file-20221217-21-rfmj1m.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=143&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="attribution"><span class="source">OECD/Provided by authors</span></span>
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</figure>
<p>That said, a global real estate crash remains highly unlikely. To put things into perspective, it is worth remembering that interest rates were higher in the early 2000s and have ebbed and flowed since (see table above). While this is unlikely to throw the housing market off balance, it can be argued it might turn investment away from single homes to <a href="https://www.bankrate.com/real-estate/what-is-a-multi-family-home/">multi-family properties</a>. Institutional investors also reinforce this trend by tending to favour multi-unit properties.</p>
<p>There are also a number of factors that are bound to stabilise the market. First, high interest rates for construction mortgages and rising land costs hold down the amount of construction. This in turn results in less living space in cities, maintaining demand. Second, the world market draws a certain resilience from its diversity, each market having different economic and geographical attributes. As there are many real estate markets spread across the world, many remain stable and offer fair value prices, such as <a href="https://www.ubs.com/global/en/wealth-management/insights/2022/global-real-estate-bubble-index/_jcr_content/mainpar/toplevelgrid_2045992449/col1/messagestage/messageteaser.0246173135.file/bGluay9wYXRoPS9jb250ZW50L2RhbS9hc3NldHMvd20vZ2xvYmFsL2luc2lnaHRzL2RvYy91YnMtZ2xvYmFsLXJlYWwtZXN0YXRlLWJ1YmJsZS1pbmRleC1lbi5wZGY=/ubs-global-real-estate-bubble-index-en.pdf">Warsaw, Poland</a>.</p>
<p>There is a lot of capital sloshing around, and real estate would generally gain proportionately in asset allocation. In the third quarter of 2022, cross-border real estate transactions around the world were estimated at over 62 billion US dollars. The Americas region alone was the leading source of international real estate investment, with <a href="https://www.us.jll.com/en/trends-and-insights/research/global/gmp#sectors">nearly 15.6 billion US dollars</a>.</p>
<p>This follows a general trend of increasing transactions across 2021 in many countries, economic consequences of the pandemic notwithstanding. In Germany alone, the office transaction volume totalled 28.2 billion euros, amounting to around <a href="https://www.catella.com/globalassets/global/mix-germany-corporate-finance/catella_european_office_market_2022.pdf">one third of European transactions</a>.</p>
<p>Overall, the likelihood of borrowers defaulting on their mortgages is generally low. This is due in part to the stringent lending practices implemented by financial institutions in the wake of the 2008 financial crisis, which have led to a decrease in the number of mortgages granted to individuals with questionable finances.</p>
<p>Much goes to show the global real estate market will adapt and recorrect itself over time, as has been the case up to now. It remains a solid and stable asset class, and fluctuations are part of its normal cycle.</p><img src="https://counter.theconversation.com/content/196685/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Les auteurs ne travaillent pas, ne conseillent pas, ne possèdent pas de parts, ne reçoivent pas de fonds d'une organisation qui pourrait tirer profit de cet article, et n'ont déclaré aucune autre affiliation que leur organisme de recherche.</span></em></p>House prices are dipping fast in many areas of the world. Is this a normal stage in the market fluctuation, or the sign of an imminent crash?Ari Birnbaum, Doctorant DBA, Université Côte d’AzurMohamad Hassan Shahrour, Maître de Conférences en Finance, Université Côte d'Azur, IAE Nice - Université Côte d'AzurLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1917372022-12-06T13:33:55Z2022-12-06T13:33:55ZWhat’s really driving ‘climate gentrification’ in Miami? It isn’t fear of sea-level rise<figure><img src="https://images.theconversation.com/files/498578/original/file-20221201-16851-81jshh.jpg?ixlib=rb-1.1.0&rect=0%2C118%2C5270%2C3550&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Residents of Miami’s Little Haiti have been fighting plans for a luxury development for several years.</span> <span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/HousingProtestLittleHaiti/53e68bb02b8f410b89000e997d87e0cb/photo">AP Photo/Lynne Sladky</a></span></figcaption></figure><p>Miami’s Little Haiti has been an immigrant community for decades. Its streets are lined with small homes and colorful shops that cater to the neighborhood, a predominantly Afro-Caribbean population with a median household income <a href="https://www.floridahealth.gov/_media/miami-dade/community-reports/miamidade-cha.pdf">well below Miami’s</a>. </p>
<p>But Little Haiti’s character may be changing.</p>
<p>A <a href="https://magiccitydistrict.com/masterplan/">$1 billion real estate development</a> called the Magic City Innovation District is planned in the neighborhood, with luxury <a href="https://magiccitydistrict.com/news/magic-city-innovation-district-gets-utilities-will-include-2598-apartments/">high-rise apartments</a>, high-end shops and glass office towers.</p>
<figure class="align-center ">
<img alt="Two women walk past Cafe Creole, with vibrant paintings on the side, including one wall reading 'Stand up lil Haiti' with a raised fist." src="https://images.theconversation.com/files/498577/original/file-20221201-20-fidq7x.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/498577/original/file-20221201-20-fidq7x.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=389&fit=crop&dpr=1 600w, https://images.theconversation.com/files/498577/original/file-20221201-20-fidq7x.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=389&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/498577/original/file-20221201-20-fidq7x.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=389&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/498577/original/file-20221201-20-fidq7x.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=488&fit=crop&dpr=1 754w, https://images.theconversation.com/files/498577/original/file-20221201-20-fidq7x.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=488&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/498577/original/file-20221201-20-fidq7x.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=488&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Little Haiti’s streets have been lined with murals and mom-and-pop shops for generations, but that’s changing.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/women-walk-past-a-mural-in-the-little-haiti-neighborhood-on-news-photo/684275454">Joe Raedle/Getty Images</a></span>
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<p>The developers <a href="https://magiccitydistrict.com/press/magic-city-innovation-district-little-haiti-creates-leasing-ethos-committing-to-sustainability-and-social-responsibility/">emphasize their commitment to sustainability</a>. But high-end real estate investments like this raise property values, pushing up property taxes and the cost of living for surrounding neighborhoods. </p>
<p>The potential effect on shops and homeowners and on the culture of the community has <a href="https://static1.squarespace.com/static/561dcdc6e4b039470e9afc00/t/5d02759f1e38b30001a4c9d4/1560442275234/CJP-LittleHaiti_FactSheet_0619-2.pdf">stoked controversy</a> and protests. Nearby <a href="https://therealdeal.com/miami/2022/07/29/crunch-fitness-founder-beefs-up-retail-portfolio-with-18m-purchase-in-little-haiti/">strip malls</a> have been bought up for new development, leaving long-time businesses with fewer affordable options. <a href="https://www.miaminewtimes.com/news/little-haiti-hemmed-in-by-big-development-projects-15509997">Other big developments</a> are now being planned. </p>
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<p>Some <a href="https://www.cnn.com/2019/07/11/us/miami-little-haiti-climate-gentrification-weir-wxc/index.html">media</a> and urban scholars have labeled what’s happening here “<a href="https://doi.org/10.1088/1748-9326/aabb32">climate gentrification</a>.”</p>
<p>It’s the idea that investors and homebuyers are changing their behavior and moving from coastal areas into poorer, higher-elevation neighborhoods like Little Haiti, which sits on a ridge less than a mile from the bay, in anticipation of worsening climate change risks, such as sea-level rise. Miami is often held up as an example.</p>
<p>But are Miami’s investors and homebuyers really motivated by climate change?</p>
<h2>A different kind of gentrification</h2>
<p>The story goes that Miami homebuyers are abandoning the coasts – where high tides can already bring street flooding in some areas – and are looking for higher-elevation areas because they want to escape climate change.</p>
<p>That isn’t what we’re finding, though.</p>
<p>In <a href="https://climatecommunication.yale.edu/visualizations-data/ycom-us/">Yale’s Climate Opinion Survey</a> of Miami-Dade County in 2021, only half of Miami residents said they believe global warming will harm them personally – far lower than the 70% who said that in Delaware and the <a href="https://www.nature.com/articles/nclimate2728">90% in Canada, Western Europe and Japan</a>. Another survey <a href="https://www.miamiherald.com/latest-news/article163066413.ece/binary/Miami_Dade_Real_%20Estate_Study_2017.pdf">found 40%</a> of Miami-Dade residents weren’t concerned about the impact climate change might have on the market. </p>
<p>In a new study, our team at the University of Miami found <a href="https://doi.org/10.1016/j.cities.2022.104025">a more nuanced picture</a> of what is actually pushing homeowners to higher ground.</p>
<p>For the most part, we found that the shift away from the coasts is fueled by costs. Flood risk plays a role through the rising cost of flood insurance, but much of the shift is plain old gentrification – developers looking for cheaper land and spinning it as a more sustainable choice to win over public officials and future residents.</p>
<p>Rather than bottom-up pressure built on residents’ alarm about sea-level rise, we found a continuation of the usual rational investment decisions.</p>
<h2>Developers are driving the process</h2>
<p>Present-day “climate gentrification” in Miami is largely determined and <a href="https://doi.org/10.1016/j.cities.2022.104025">driven by capitalist investment opportunities</a> – relatively lower prices and greater expected returns – which are the characteristics of the traditional gentrification process.</p>
<p>We found that neither homebuyers nor real estate agents are driving this process today in Miami. Rather, developers are <a href="https://doi.org/10.1016/j.cities.2022.104025">using the concept of climate risk to market properties</a> in more elevated areas and are working in tandem with policymakers to facilitate urban redevelopment.</p>
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<p>Miami is very different from other global cities, in that its wealthy homebuyers and second-home buyers exhibit fewer concerns about rising sea levels and climate change. A large percentage of Miami homebuyers – <a href="https://www.miamirealtors.com/2021/11/02/88230/">about 13% in 2021</a> – don’t live in the U.S. and <a href="https://www.ucpress.edu/book/9780520297111/the-global-edge">may evaluate risk differently</a>, seeing Miami properties as safer investments than they have at home or as future second homes. </p>
<p>Miami’s gentrification also isn’t limited to higher-elevation neighborhoods. In coastal areas such as <a href="https://en.wikipedia.org/wiki/Gentrification_of_Miami">Miami Beach</a>, taxes and housing and rental prices are rising, and poorer people are being pushed out of neighborhoods. Miami’s average rent is now <a href="https://business.fau.edu/executive-education/overvalued-rental-markets/">over $2,800 a month</a>, up 16% from October 2021 to October 2022. That’s about $800 higher than the U.S. average, and it rose at nearly twice the national rate over the past year.</p>
<h2>Coastal homebuyers should be more concerned</h2>
<p>Climate change is without question a risk for Miami. The insurance industry <a href="https://www.mckinsey.com/capabilities/sustainability/our-insights/will-mortgages-and-markets-stay-afloat-in-florida">warns that sea-level rise</a> and moderate flooding of up to 1 foot will affect 48% of total properties in oceanfront Miami-Dade County by 2050. </p>
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<p>Homebuyers should be more concerned than they are.</p>
<p>We believe “climate gentrification” is a meaningful concept for exploring how the impacts and costs of climate change will shift housing and urban inequalities in the future. But so far, <a href="https://doi.org/10.1016/j.cities.2022.104025">the idea that gentrification is fueled by climate change in Miami</a> doesn’t match reality.</p><img src="https://counter.theconversation.com/content/191737/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Miami is often held up as an example of ‘climate gentrification.’ But a closer look finds a bigger driver of flashy new developments in low-income neighborhoods.Richard Grant, Professor of Geography and Urban Studies, University of MiamiHan Li, Assistant Professor of Geography, University of MiamiLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1930052022-11-03T12:00:53Z2022-11-03T12:00:53ZA brief history of the mortgage, from its roots in ancient Rome to the English ‘dead pledge’ and its rebirth in America<figure><img src="https://images.theconversation.com/files/492228/original/file-20221028-27-xjagjx.jpg?ixlib=rb-1.1.0&rect=280%2C16%2C5155%2C3337&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Mortgages can haunt homeowners.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/illustration-of-a-mortgage-monster-looming-over-a-family-news-photo/584042598?phrase=mortgage%20homes&adppopup=true">GraphicaArtis/Getty Images</a></span></figcaption></figure><p>The average interest rate for a new U.S. <a href="https://www.cbsnews.com/news/home-loan-mortgage-interest-rate-7-percent-highest-since-2001/">30-year fixed-rate mortgage topped 7% in late October 2022</a> for the first time in more than two decades. It’s a sharp increase from one year earlier, when <a href="https://www.valuepenguin.com/mortgages/historical-mortgage-rates">lenders were charging homebuyers only 3.09%</a> for the same kind of loan. </p>
<p>Several factors, including <a href="https://www.nerdwallet.com/article/mortgages/fed-mortgage-rates">inflation rates and the general economic outlook</a>, influence mortgage rates. A primary driver of the ongoing upward spiral is the <a href="https://abc7chicago.com/fed-interest-rate-decision-today-hike-federal-reserve-meeting-november/12408055/">Federal Reserve’s series of interest rate hikes</a> intended to tame inflation. Its decision to increase the benchmark rate by <a href="https://www.federalreserve.gov/newsevents/pressreleases/monetary20221102a.htm">0.75 percentage points on Nov. 2, 2022</a>, to as much as 4% will propel the cost of mortgage borrowing even higher.</p>
<p>Even if you have had mortgage debt for years, you might be unfamiliar with the history of these loans – a subject I cover <a href="https://scholar.google.com/citations?user=KVv47noAAAAJ&hl=en&oi=ao">in my mortgage financing course</a> for undergraduate business students at Mississippi State University.</p>
<p>The term dates back to <a href="https://www.english-heritage.org.uk/learn/story-of-england/medieval/">medieval England</a>. But the roots of these legal contracts, in which land is pledged for a debt and will become the property of the lender if the loan is not repaid, go back thousands of years. </p>
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<h2>Ancient roots</h2>
<p>Historians trace the <a href="https://www.kingjamesbibleonline.org/Nehemiah-5-3/">origins of mortgage contracts</a> to the reign of King Artaxerxes of Persia, who ruled modern-day Iran in the fifth century B.C. The Roman Empire formalized and documented the legal process of pledging collateral for a loan. </p>
<p>Often using the <a href="https://www.biblegateway.com/passage/?search=John%202%3A13-16&version=NIV">forum and temples as their base of operations</a>, <em>mensarii</em>, which is derived from the word <em>mensa</em> or “bank” in Latin, would set up loans and charge <a href="https://www.biblegateway.com/passage/?search=John%202%3A13-16&version=NIV">borrowers interest</a>. These government-appointed public bankers required the borrower to put up collateral, whether real estate or personal property, and their agreement regarding the use of the collateral would be handled in one of three ways. </p>
<p>First, the <a href="https://www.merriam-webster.com/dictionary/fiducia"><em>Fiducia</em></a>, Latin for “trust” or “confidence,” required the transfer of both ownership and possession to lenders until the debt was repaid in full. Ironically, this arrangement involved no trust at all.</p>
<p>Second, the <a href="https://www.merriam-webster.com/dictionary/pignus"><em>Pignus</em></a>, Latin for “pawn,” allowed borrowers to retain ownership while <a href="https://scholarship.law.upenn.edu/cgi/viewcontent.cgi?referer=https://www.google.com/&httpsredir=1&article=1684&context=penn_law_review">sacrificing possession and use</a> until they repaid their debts. </p>
<p>Finally, the <a href="https://legaldictionary.lawin.org/hypotheca/"><em>Hypotheca</em></a>, Latin for “pledge,” let borrowers retain both ownership and possession while repaying debts. </p>
<h2>The living-versus-dead pledge</h2>
<p><a href="https://www.britannica.com/biography/Claudius-Roman-emperor">Emperor Claudius</a> brought Roman law and customs to Britain in A.D. 43. Over the next <a href="https://www.english-heritage.org.uk/learn/story-of-england/romans/">four centuries of Roman rule</a> and the <a href="https://www.english-heritage.org.uk/learn/story-of-england/early-medieval/">subsequent 600 years known as the Dark Ages</a>, the British adopted another Latin term for a pledge of security or collateral for loans: <a href="https://worldofdictionary.com/dict/latin-english/meaning/vadium"><em>Vadium</em></a>.</p>
<p>If given as collateral for a loan, real estate could be offered as “<a href="https://www.merriam-webster.com/dictionary/vadium%20vivum"><em>Vivum Vadium</em></a>.” The literal translation of this term is “living pledge.” Land would be temporarily pledged to the lender who used it to generate income to pay off the debt. Once the lender had collected enough income to cover the debt and some interest, the land would revert back to the borrower.</p>
<p>With the alternative, the “<a href="https://www.merriam-webster.com/dictionary/mortuum%20vadium"><em>Mortuum Vadium</em></a>” or “dead pledge,” land was pledged to the lender until the borrower could fully repay the debt. It was, essentially, an interest-only loan with full principal payment from the borrower required at a future date. When the lender demanded repayment, the borrower had to pay off the loan or lose the land. </p>
<p>Lenders would keep proceeds from the land, be it income from farming, selling timber or renting the property for housing. In effect, the land was <a href="https://www.jstor.org/stable/pdf/1321129.pdf">dead to the debtor</a> during the term of the loan because it provided no benefit to the borrower. </p>
<p>Following <a href="https://www.royal.uk/william-the-conqueror">William the Conqueror’s victory</a> at the Battle of Hastings in 1066, the English language was heavily influenced by <a href="https://blocs.mesvilaweb.cat/subirats/the-norman-conquest-the-influence-of-french-on-the-english-language-loans-and-calques/">Norman French</a> – William’s language.</p>
<p>That is how the Latin term “<em>Mortuum Vadium</em>” morphed into “<em>Mort Gage</em>,” Norman French for “dead” and “pledge.” “<a href="https://www.etymonline.com/word/mortgage">Mortgage</a>,” a <a href="https://ia600201.us.archive.org/1/items/cu31924021674399/cu31924021674399.pdf">mashup of the two words</a>, then entered the English vocabulary.</p>
<h2>Establishing rights of borrowers</h2>
<p>Unlike today’s mortgages, which are usually due within 15 or 30 years, English loans in the 11th-16th centuries were unpredictable. <a href="https://www.jstor.org/stable/pdf/1323192.pdf">Lenders could demand repayment</a> at any time. If borrowers couldn’t comply, lenders could seek a court order, and the land would be forfeited by the borrower to the lender. </p>
<p>Unhappy borrowers could <a href="https://www.law.cornell.edu/wex/chancery">petition the king</a> regarding their predicament. He could refer the case to the lord chancellor, who could <a href="https://www.britannica.com/topic/Chancery-Division">rule as he saw fit</a>. </p>
<p><a href="https://www.britannica.com/biography/Francis-Bacon-Viscount-Saint-Alban">Sir Francis Bacon</a>, England’s lord chancellor from 1618 to 1621, <a href="https://www.jstor.org/stable/752041">established</a> the <a href="https://www.law.cornell.edu/wex/equity_of_redemption">Equitable Right of Redemption</a>.</p>
<p>This new right allowed borrowers to pay off debts, even after default.</p>
<p>The official end of the period to redeem the property was called <a href="https://www.law.cornell.edu/wex/foreclosure">foreclosure</a>, which is derived from an Old French word that means “<a href="https://www.etymonline.com/word/foreclose">to shut out</a>.” Today, foreclosure is a legal process in which lenders to take possession of property used as collateral for a loan. </p>
<h2>Early US housing history</h2>
<p>The <a href="https://www.loc.gov/classroom-materials/united-states-history-primary-source-timeline/colonial-settlement-1600-1763/overview/">English colonization</a> of what’s now <a href="https://themayflowersociety.org/history/the-mayflower-compact/">the United States</a> didn’t immediately transplant mortgages across the pond. </p>
<p>But eventually, U.S. financial institutions were offering mortgages.</p>
<p><a href="https://www.huduser.gov/publications/pdf/us_evolution.pdf">Before 1930, they were small</a> – generally amounting to at most half of a home’s market value.</p>
<p>These loans were generally short-term, maturing in under 10 years, with payments due only twice a year. Borrowers either paid nothing toward the principal at all or made a few such payments before maturity.</p>
<p>Borrowers would have to refinance loans if they couldn’t pay them off.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/492809/original/file-20221101-25187-ypftn1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Aerial view of a single-family home community" src="https://images.theconversation.com/files/492809/original/file-20221101-25187-ypftn1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/492809/original/file-20221101-25187-ypftn1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=397&fit=crop&dpr=1 600w, https://images.theconversation.com/files/492809/original/file-20221101-25187-ypftn1.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=397&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/492809/original/file-20221101-25187-ypftn1.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=397&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/492809/original/file-20221101-25187-ypftn1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=499&fit=crop&dpr=1 754w, https://images.theconversation.com/files/492809/original/file-20221101-25187-ypftn1.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=499&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/492809/original/file-20221101-25187-ypftn1.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=499&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Mortgages make it easier for Americans to buy houses like these in Huntington Beach, Calif.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/aerial-view-of-single-family-homes-photographed-during-a-news-photo/1181102068?phrase=single-family%20house&adppopup=true">Jeff Gritchen/MediaNews Group/Orange County Register via Getty Images</a></span>
</figcaption>
</figure>
<h2>Rescuing the housing market</h2>
<p>Once America fell into the <a href="https://www.history.com/topics/great-depression">Great Depression</a>, the <a href="https://www.stlouisfed.org/news-releases/2008/05/02/does-the-great-depression-hold-the-answers-for-the-current-mortgage-distress">banking system collapsed</a>. </p>
<p>With most homeowners unable to pay off or refinance their mortgages, the <a href="https://www.federalreservehistory.org/essays/great-depression">housing market crumbled</a>. The number of <a href="https://www.encyclopedia.com/education/news-and-education-magazines/housing-1929-1941">foreclosures grew to over 1,000 per day by 1933</a>, and housing prices fell precipitously. </p>
<p>The <a href="https://www.fhfaoig.gov/Content/Files/History%20of%20the%20Government%20Sponsored%20Enterprises.pdf">federal government responded by establishing</a> new agencies to stabilize the housing market.</p>
<p>They included the <a href="https://www.hud.gov/program_offices/housing/fhahistory">Federal Housing Administration</a>. It provides <a href="https://www.consumerfinance.gov/ask-cfpb/what-is-mortgage-insurance-and-how-does-it-work-en-1953/">mortgage insurance</a> – borrowers pay a small fee to protect lenders in the case of default. </p>
<p>Another new agency, the <a href="https://sf.freddiemac.com/articles/insights/why-americas-homebuyers-communities-rely-on-the-30-year-fixed-rate-mortgage">Home Owners’ Loan Corp.</a>, established in 1933, bought defaulted short-term, semiannual, interest-only mortgages and transformed them into new long-term loans lasting 15 years.</p>
<p>Payments were monthly and self-amortizing – covering both principal and interest. They were also fixed-rate, remaining steady for the life of the mortgage. Initially they skewed more heavily toward interest and later defrayed more principal. The corporation made new loans for three years, tending to them until it <a href="https://content.time.com/time/subscriber/article/0,33009,858135,00.html">closed in 1951</a>. It pioneered long-term mortgages in the U.S.</p>
<p>In 1938 Congress established the Federal National Mortgage Association, better known as <a href="https://www.fanniemae.com/about-us/who-we-are/history">Fannie Mae</a>. This <a href="https://www.financial-dictionary.info/terms/government-sponsored-enterprise/">government-sponsored enterprise</a> made fixed-rate long-term mortgage loans viable <a href="https://www.investopedia.com/terms/s/securitization.asp">through a process called securitization</a> – selling debt to investors and using the proceeds to purchase these long-term mortgage loans from banks. This process reduced risks for banks and encouraged long-term mortgage lending.</p>
<h2>Fixed- versus adjustable-rate mortgages</h2>
<p>After World War II, Congress authorized the Federal Housing Administration to insure <a href="https://www.govinfo.gov/content/pkg/CPRT-108HPRT92629/html/CPRT-108HPRT92629.htm">30-year loans on new construction</a> and, a few years later, purchases of existing homes. But then, the <a href="https://files.stlouisfed.org/files/htdocs/publications/review/69/09/Historical_Sep1969.pdf">credit crunch of 1966</a> and the years of high inflation that followed made adjustable-rate mortgages more popular.</p>
<p>Known as ARMs, these mortgages have stable rates for only a few years. Typically, the initial rate is significantly lower than it would be for 15- or 30-year fixed-rate mortgages. Once that initial period ends, <a href="https://www.investopedia.com/terms/a/arm.asp">interest rates on ARMs</a> get adjusted up or down annually – along with monthly payments to lenders. </p>
<p>Unlike the rest of the world, where ARMs prevail, Americans still prefer the <a href="https://sf.freddiemac.com/articles/insights/why-americas-homebuyers-communities-rely-on-the-30-year-fixed-rate-mortgage">30-year fixed-rate mortgage</a>.</p>
<p>About <a href="https://data.census.gov/cedsci/table?q=DP04&t=Housing">61% of American homeowners</a> have mortgages today – with <a href="https://doi.org/10.1080/15214842.2020.1757357">fixed rates the dominant type</a>.</p>
<p>But as interest rates rise, demand for <a href="https://www.corelogic.com/intelligence/interest-rates-are-up-but-arm-backed-home-purchases-are-way-up/">ARMs is growing</a> again. If the Federal Reserve fails to slow inflation and interest rates continue to climb, unfortunately for some ARM borrowers, the term “dead pledge” may live up to its name.</p><img src="https://counter.theconversation.com/content/193005/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michael J. Highfield does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>With 30-year fixed rates hitting a 20-year high of 7%, a finance scholar explains where these life-altering loans originated.Michael J. Highfield, Professor of Finance and Warren Chair of Real Estate Finance, Mississippi State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1917332022-10-20T13:14:45Z2022-10-20T13:14:45ZWhy so many people have moved to Florida – and into harm’s way<figure><img src="https://images.theconversation.com/files/489663/original/file-20221013-16-sbv0hb.jpg?ixlib=rb-1.1.0&rect=114%2C168%2C3897%2C2526&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Miami's streets were bustling and crowded by 1926.
</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/recent-photo-taken-in-the-city-of-miami-which-can-well-news-photo/515568092?phrase=new%20florida%20housing&adppopup=true">Bettmann/Getty Images</a></span></figcaption></figure><p>Hurricane Ian barreled ashore with winds of up to <a href="https://www.nesdis.noaa.gov/news/hurricane-ians-path-of-destruction">150 mph</a> (240 kph) on Florida’s southwest coast on Sept. 28, 2022.</p>
<p>The storm’s powerful winds and torrential rains reduced entire communities to rubble, killing more than <a href="https://abcnews.go.com/US/multiple-deaths-reported-hurricane-ian-slams-florida/story?id=90693636">120 people</a>, including many who drowned in floodwaters resulting from the nearly 18-foot (5.5-meter) storm surge. Bridges connecting Sanibel, Captiva and other barrier islands with the mainland flooded and crumbled, <a href="https://wusfnews.wusf.usf.edu/2022-09-30/damage-from-hurricane-ian-cuts-sanibel-island-off-from-floridas-mainland">isolating those areas</a>.</p>
<p>Estimates of the economic toll are still preliminary. But as a <a href="https://people.miami.edu/profile/rbachin@miami.edu">historian who studies South Florida’s cities and environment</a>, I’m certain that the havoc Ian wreaked will make it <a href="https://www.ncei.noaa.gov/access/billions/">among the worst storms on record</a>, along with Harvey and Maria in 2017 and Katrina in 2005.</p>
<p>And based on how Florida has responded to similar devastation in the past, I highly doubt that Ian will do much to slow the pace of the state’s rapid population growth in the near future. </p>
<h2>Snowbirds are changing their routes</h2>
<p>Over 22 million people currently live in Florida.</p>
<p>That’s about 37% more than the <a href="https://www.macrotrends.net/states/florida/population">16 million who resided in the state in 2000</a>. And demographers project that the population will continue increasing, to about <a href="https://www.usnews.com/news/best-states/florida/articles/2022-07-27/forecast-florida-is-still-growing-but-faces-future-slowdown">25 million</a> within the next decade.</p>
<p>Florida consistently <a href="https://www.jamesmadison.org/why-are-people-moving-to-florida">ranks as the top destination</a> for <a href="https://taxfoundation.org/taxes-affect-state-migration-trends/">Americans who relocate to another state</a>.</p>
<p>But many Florida residents spend only the winter months there, returning when the climate warms up back home. In the weeks that followed the storm, analysts were predicting that most of these annual short-term residents – <a href="https://www.vacationsmadeeasy.com/TheBLT/30ThingsYouProbablyDidntKnowAboutSnowbirds.html">called snowbirds</a> – will not forgo their annual voyage. Instead, many say they’ll simply shift <a href="https://www.miamiherald.com/news/business/real-estate-news/article266631866.html">their migratory</a> course and land somewhere else in Florida.</p>
<p>South Florida real estate agents are bracing for stronger-than-usual demand for seasonal rentals in Dade and Broward counties on Florida’s southeast coast, which escaped Ian’s wrath. The extra interest is leading to further spikes in the already overheated real estate markets in <a href="https://www.miamiherald.com/news/business/real-estate-news/article266631866.html">places like Miami and Fort Lauderdale</a>.</p>
<p>Today’s new and part-time Floridians are drawn by the same factors that have lured settlers and snowbirds for a century: warm weather and waterfront views, along with <a href="https://www.stateofflorida.com/taxes/">lower taxes</a> <a href="https://www.cato.org/policy-analysis/entrepreneurs-regulations-removing-state-local-barriers-new-businesses#legal-obstacles">and fewer regulations</a> than in other parts of the country.</p>
<h2>Draining the swampland</h2>
<p>Early developers didn’t let inhospitable environments deter them. In the decades after the Civil War, they transformed the peninsular state’s <a href="https://www.tcpalm.com/story/news/local/verobeachcentennial/2019/04/11/centennial-orchid-island-had-humble-beginnings/3232763002/">mosquito-ridden, alligator-occupied swampland</a> into hotels, homesteads and farmland. </p>
<p>Florida promoters lured tourists and settlers alike with promises of <a href="https://upf.com/book.asp?id=9780813044811">wealth, land and leisure</a>, whether their sales pitches had to do with citrus and sugar, or sun and sand. Engineers used modern technology to accomplish the large-scale transformation and make way for unprecedented land speculation and development.</p>
<p>Everglades drainage began in earnest in the 1880s when a wealthy <a href="https://upf.com/book.asp?id=9780813016290">Philadelphian named Hamilton Disston</a> created the Okeechobee Land Co. to develop a system of canals that would facilitate “land reclamation.”</p>
<p>Disston purchased over 4 million acres the state had designated as uninhabitable swampland in exchange for US$1 million and his promise to transform it. In 1881, <a href="https://www.nytimes.com/1881/06/17/archives/buying-four-million-acres-an-immense-sale-of-land-by-the-state-of.html">The New York Times</a> called this “the largest purchase of land ever made by a single person in the world.”</p>
<p>His gambit sparked Florida’s first real estate boom.</p>
<p>Disston sent brochures around the country, and to people as far away as Scotland, Denmark, Germany and Italy, that touted Florida’s “inexhaustibly rich lands” and an “equitable and lovely climate where merely to live is a pleasure, a luxury heretofore accessible only to millionaires,” according to Frank B. Sessa’s 1950 history of greater Miami.</p>
<p><a href="https://atom.library.miami.edu/box-16-disston-hamilton-and-associated-companies">Disston and others began selling</a> reclaimed land to railroads, farming interests and land developers. By the early 20th century, inland drainage was giving rise to the <a href="https://www.worldcat.org/title/1496940">sugar, citrus and winter vegetable industries</a>.</p>
<p>The drainage made it possible for the railroad magnates <a href="https://www.worldcat.org/title/1496940">Henry Flagler and Henry Plant</a> to extend their railroads to southeast and southwest Florida, respectively. Train travel greatly expanded opportunities for tourists and new residents by the late 19th century.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/490446/original/file-20221018-14-usn7hk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A black and white photo of a thatched cottage in a tropical place" src="https://images.theconversation.com/files/490446/original/file-20221018-14-usn7hk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/490446/original/file-20221018-14-usn7hk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=642&fit=crop&dpr=1 600w, https://images.theconversation.com/files/490446/original/file-20221018-14-usn7hk.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=642&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/490446/original/file-20221018-14-usn7hk.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=642&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/490446/original/file-20221018-14-usn7hk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=806&fit=crop&dpr=1 754w, https://images.theconversation.com/files/490446/original/file-20221018-14-usn7hk.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=806&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/490446/original/file-20221018-14-usn7hk.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=806&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">This tiny thatched Florida house, photographed in the early 1900s, looks nothing like housing there today.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/thatched-cottage-in-cocoanut-grove-florida-u-s-a-c1900-r-y-news-photo/541520652?adppopup=true">Hulton Archive/Getty Images</a></span>
</figcaption>
</figure>
<h2>Stormy weather from the start</h2>
<p>Attempts to control water on the ground, however, couldn’t curtail weather-related hazards. In 1926, a <a href="https://www.weather.gov/mfl/miami_hurricane">hurricane slammed into Miami</a>, leaving more than 390 people dead and causing property damage of more than $76 million.</p>
<p>A <a href="https://scholar.library.miami.edu/miamidigital/search/allGalleryPages.php?IDtitle=1851&objNo=000003&seqNo=0001&IDmainrecord=357">Western Union telegram</a> from Jessie Wirth Munroe, a survivor, read like a text from someone who had endured Hurricane Ian: “We are safe. Water front completely destroyed.”</p>
<p>Subsequent storms wrought greater devastation.</p>
<p>A <a href="https://www.simonandschuster.com/books/The-Swamp/Michael-Grunwald/9780743251075">1928 hurricane</a> killed over 2,500 people just south of Lake Okeechobee, most of them Black farmworkers laboring in the new agricultural town of Belle Glade, which was washed away.</p>
<p>In 1935, a <a href="http://newdealstories.com/tag/ccc-search-and-recovery-1935-florida-hurricane/">Labor Day storm hit the Civilian Conservation Corps camps</a> in the Florida Keys, where workers, many of them World War I veterans, were building a highway that would link mainland Florida to Key West. </p>
<p>“Clinging to beds, using mattresses as overhead cover, the people of the Keys had watched large rocks roll about like pebbles, buildings crumble like houses of cards, water lift up houses and carry them off,” wrote <a href="https://www.amazon.com/Miami-U-S-Helen-Muir/dp/0940495198">Helen Muir</a>, a journalist who moved to Miami in 1934 and chronicled the city’s growth. “The hurricane moved in like a giant mowing machine and leveled everything.”</p>
<h2>No stopping the newcomers</h2>
<p>Yet people kept coming, especially after World War II and the advent of <a href="https://www.smithsonianbooks.com/store/history/cool-comfort-americas-romance-air-conditioning/">widespread air conditioning</a>.</p>
<p>Many of the <a href="https://www2.census.gov/library/visualizations/2000/dec/2000-resident-population/florida.pdf">close to 3 million</a> people who arrived between 1940 and 1960 were veterans who had trained in South Florida during World War II. </p>
<p>In addition, millions more <a href="https://www.migrationpolicy.org/article/caribbean-immigrants-united-states">immigrated from the Caribbean</a> and <a href="https://www.migrationpolicy.org/article/south-american-immigrants-united-states">Latin America</a> as transportation become easier and cheaper.</p>
<p>In particular, <a href="https://www.washingtonpost.com/nation/2022/09/24/florida-desantis-immigration-cuba-venezuela/">people fleeing political persecution and economic instability</a> in places such as Cuba, Haiti and, more recently, Venezuela and Central America have settled in Florida. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/490447/original/file-20221018-9021-cp92jo.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="New houses and sidewalks under construction" src="https://images.theconversation.com/files/490447/original/file-20221018-9021-cp92jo.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/490447/original/file-20221018-9021-cp92jo.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=401&fit=crop&dpr=1 600w, https://images.theconversation.com/files/490447/original/file-20221018-9021-cp92jo.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=401&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/490447/original/file-20221018-9021-cp92jo.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=401&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/490447/original/file-20221018-9021-cp92jo.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=504&fit=crop&dpr=1 754w, https://images.theconversation.com/files/490447/original/file-20221018-9021-cp92jo.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=504&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/490447/original/file-20221018-9021-cp92jo.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=504&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Housing construction was booming in Miami in 2002, a few years after Andrew destroyed many homes.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/construction-workers-pour-a-sidewalk-in-front-of-new-homes-news-photo/1480805">Joe Raedle/Getty Images</a></span>
</figcaption>
</figure>
<h2>Rebuilding and rebuilding</h2>
<p>Though each storm seemed to threaten the population boom, the new arrivals tended to stick around. Civic boosters, business leaders and policymakers have <a href="https://www.govtech.com/em/disaster/recovery-florida-city-rebuilds.html">invariably promised to rebuild</a>.</p>
<p>After Hurricane Andrew, a Category 5 storm, slammed into South Florida in 1992, the state imposed a stronger and more <a href="https://www.nytimes.com/live/2022/09/28/us/hurricane-ian-florida#category-5-hurricane">uniform building code</a>. The authorities <a href="https://www.csmonitor.com/USA/Society/2022/0929/Florida-has-invested-in-resilience.-Hurricane-Ian-is-a-sobering-test">invested in additional storm preparedness efforts</a> after the spate of hurricanes hit the state in 2004. </p>
<p>Could these patterns change after Hurricane Ian? </p>
<p>Windstorm insurance premiums were climbing beyond the reach of many homeowners before it hit. <a href="https://www.nytimes.com/2022/10/13/climate/florida-real-estate-hurricane-ian.html">Analysts predict</a> that premiums will continue to rise, making it harder for residents to afford to remain in Florida and even more challenging for new homebuyers to secure policies.</p>
<p>It remains to be seen if the pro-growth mentality and belief in technological innovation that have shaped Florida’s history can forestall the challenges of climate change and the increasingly severe storms it brings about in the decades ahead.</p><img src="https://counter.theconversation.com/content/191733/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Robin Faith Bachin receives funding from JPMorgan Chase and Co., Miami-Dade County Department of Public Housing and Community Development.</span></em></p>More than 22 million people currently live in Florida following a century of rapid growth.Robin Faith Bachin, Professor of History, University of MiamiLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1912282022-09-30T12:27:10Z2022-09-30T12:27:10ZTrump properties aren’t the only ones to see wild valuations – putting a price on real estate isn’t straightforward<figure><img src="https://images.theconversation.com/files/487394/original/file-20220929-5105-v0nt99.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C5477%2C3640&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">40 Wall Street is one of the Trump Organization properties included in the lawsuit.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/view-of-the-trump-building-on-wall-street-in-lower-news-photo/1344365626?adppopup=true">Roy Rochlin/Getty Images</a></span></figcaption></figure><p>On the lower tip of Manhattan there is a prime piece of real estate, the price of which is somewhat up for debate. </p>
<p>To the owners, the Trump Organization, <a href="https://www.40wallstreet.com/">40 Wall Street</a> is worth an eye-watering US$735 million, or at least <a href="https://ag.ny.gov/press-release/2022/attorney-general-james-sues-donald-trump-years-financial-fraud">it was in 2015</a>. Others disagree, pointing to an appraisal that year by a real estate firm that priced it at $540 million. But even that was inflated, <a href="https://ag.ny.gov/press-release/2022/attorney-general-james-sues-donald-trump-years-financial-fraud">according to the New York attorney general</a>: An appraisal three years earlier suggested the worth of the property then was $220 million.</p>
<p>The probe into the <a href="https://www.nytimes.com/2022/09/21/nyregion/trump-fraud-lawsuit-ny.html">alleged fraudulent activities</a> relating to Donald Trump’s property empire has many people wondering about the art and science of real estate valuations. Even when there are no claims of fraud involved, valuations can vary widely – and it is a longstanding problem. This likely sets the bar high for New York’s civil lawsuit to prove its charge, that at least some valuations were fraudulent as opposed to “business as usual.”</p>
<p>In a 1987 <a href="http://www.communicationcache.com/uploads/1/0/8/8/10887248/experts_amateurs_and_real_estate-_an_anchoring-and-adjustment_perspective_on_property_pricing_decisions.pdf">experiment</a>, experienced real estate agents were handed identical information regarding a typical house and asked to estimate its value, with the only difference being the listing price. The resulting valuations differed significantly. With commercial property, the large divergence in valuations has likewise long been <a href="https://www.proquest.com/docview/2299168490?pq-origsite=gscholar&fromopenview=true">recognized as a concern</a>.</p>
<figure class="align-center ">
<img alt="A Black woman in a green top stands behind a lectern." src="https://images.theconversation.com/files/487429/original/file-20220929-22-stjger.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/487429/original/file-20220929-22-stjger.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/487429/original/file-20220929-22-stjger.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/487429/original/file-20220929-22-stjger.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/487429/original/file-20220929-22-stjger.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/487429/original/file-20220929-22-stjger.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/487429/original/file-20220929-22-stjger.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">New York Attorney General Letitia James disputes the Trump Organization’s property valuations.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/attorney-general-letitia-james-speaks-during-a-press-news-photo/1425942800?adppopup=true">Michael M. Santiago/Getty Images</a></span>
</figcaption>
</figure>
<p>So why do real estate values seem so subjective? As someone who <a href="https://www.uml.edu/msb/faculty/merriman-kimberly.aspx">researches real estate trends</a>, I know the practice is more art than science. Valuations are educated opinions. They are based on some degree of factual information, but not facts in themselves. Expert valuations vary based on differing judgments of the same data. And when it comes to commercial real estate, experts even disagree over the methods involved.</p>
<h2>The 3 ways to value property</h2>
<p>Before delving deeper, some valuation basics: There are <a href="https://pickensassessor.org/wp-content/uploads/sites/26/2018/07/Appraisal-Process.pdf">three overarching ways</a> to value commercial real estate – the cost, the market and the income approaches. </p>
<p>The cost and market approaches are both based on the <a href="https://www.boe.ca.gov/info/iav/lesson2.htm#:%7E:text=The%20principle%20of%20substitution%20states,or%20purchase%20a%20similar%20property.">economic principle of substitution</a>, which equates the value of real estate to the cost to create or acquire a substitute property of comparable utility. For example, an office value estimate of $200 per square foot is reasonable if it costs this amount to purchase an existing comparable office or to newly construct one.</p>
<p>The income approach is based on anticipation of future benefits, which equates the value of real estate to the income stream the property can generate. So a rented office that earns its owner $2 million a year in net income could reasonably be worth about twice the value of an office with $1 million a year in net income.</p>
<p>Appraisers use all three approaches when possible to value a property. Though commercial properties by necessity lean heavily on the income approach to mimic investors, it is also the most prone to value differences because it requires a crystal ball to accurately estimate future income.</p>
<h2>Built on assumptions</h2>
<p>Even when appraisers use the same approach and methods, there is ample room for difference. All three valuation approaches require assumptions, which provide fertile ground for expert disagreement.</p>
<p>The cost approach requires an estimation of depreciation and <a href="https://www.masterclass.com/articles/functional-obsolescence-explained">obsolescence</a> and a way to value the land that the building sits on. Depreciation refers to the physical aging of the property. Obsolescence accounts for trends and market conditions that erode the property’s desirability, such as an outdated building design or an increase in neighborhood crime.</p>
<p>The market approach is limited to past sales that require adjustments to reflect such factors, beyond timing, as any difference in the desirability of a location or the physical condition of a sale property relative to the appraised property.</p>
<p>Meanwhile, the income approach requires the appraiser to make assumptions on a property’s future income stream. Appraisers will typically consider market rents and, for property like hotels that operate as a business, historic income and expenses.</p>
<p>The pandemic made these various assumptions much more speculative due to uncertainty over the future use of office space. Even a property’s location as an influence on real estate value is no longer straightforward. My <a href="https://sloanreview.mit.edu/article/the-new-strategic-road-map-for-attracting-and-retaining-working-parents/">research</a> points to shifting perspectives on what is deemed a quality location, with real estate premiums associated with central business districts becoming dubious as more people <a href="https://www.mckinsey.com/industries/real-estate/our-insights/americans-are-embracing-flexible-work-and-they-want-more-of-it">work remotely</a>.</p>
<p>Experts also disagree over which aspects of real estate to include in a valuation. Real estate that generates income has components beyond the actual land and improvements to it. Elements that contribute to generating income but are not “real property” – things such as furnishings and a hotel’s brand recognition – need to be stripped out of the valuation for some purposes.</p>
<p>Valuations for tax purposes generally focus on real property value, while valuations for lenders tend to include more of these other real estate components.</p>
<p>Consider hotels as an example. It is generally accepted that the hotel’s brand and its furniture, fixtures and equipment are not real property, yet they have big <a href="https://hotelsmag.com/news/valuation-strategies-for-the-new-normal/">implications</a> for its value.</p>
<h2>Influencing assessments</h2>
<p>Commercial real estate does not offer the transparent pricing structure built into some assets like stocks.</p>
<p>Real estate is less frequently traded and sales go through a number of intermediaries, and much of the information surrounding a sale is not publicly shared. As a result, buyers do not have an easy benchmark for price comparison – it is like trying to decipher the going price for a hip replacement or a piece of fine art.</p>
<p>Furthermore, no two pieces of real estate are precisely the same. Commercial real estate assets vary in a multitude of attributes – such as location, condition, permitted uses and existing lease obligations – that affect potential income.</p>
<p>Indeed, <a href="https://research.cornell.edu/news-features/behavior-commercial-real-estate">research shows</a> many commercial properties are listed for sale with no stated asking price because of the difficulty in determining potential revenue, which can vary based on what a given buyer plans to do with the property.</p>
<p>And sellers do not want to inadvertently underprice their asset. Take, for example, the 2014 <a href="https://www.nytimes.com/2014/10/07/nyregion/waldorf-astoria-hotel-to-be-sold-for-195-billion.html">sale of the Waldorf Astoria hotel</a> in New York. The buyer, a Chinese company, deliberately paid a higher price than local investors might because they thought they could reap higher income through converting some space into luxury condos for Chinese buyers. The plan ultimately <a href="https://www.bloomberglinea.com/2021/10/08/nycs-waldorf-gets-plush-renovation-becomes-icon-of-chinas-overreach/">hit some snags</a>, but it nonetheless justified a larger purchase price. </p>
<h2>Rules and regulations</h2>
<p>The uncertainty inherent in real estate values also leaves appraisers vulnerable to client influence. </p>
<p>A <a href="https://link.springer.com/article/10.1007/s10551-015-2953-1">2015 study in the U.K.</a> examined appraisal values for institutional real estate funds and found that their valuation methods arbitrarily changed depending on what kinds of valuations the fund clients seemingly preferred.</p>
<p>So what does this all mean for Trump’s properties? Clearly real estate valuations aren’t a science, but it’s not the Wild West either. Appraisers are expected to follow regulatory standards, certification and licensing requirements and professional norms in the valuation of real estate. The question for the courts hearing the case of Trump properties is whether someone failed to follow them.</p><img src="https://counter.theconversation.com/content/191228/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Kimberly Merriman does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>What is real estate actually worth? It depends a lot on who you ask and what method they use to work it out.Kimberly Merriman, Professor of Management, Manning School of Business, UMass LowellLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1859352022-09-22T12:39:39Z2022-09-22T12:39:39ZFemale Airbnb hosts earn thousands less per year than male hosts<figure><img src="https://images.theconversation.com/files/475664/original/file-20220722-16-fgxx67.jpg?ixlib=rb-1.1.0&rect=33%2C8%2C5558%2C3713&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The gender wage gap persists even in the 'sharing economy.'</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/salary-and-wage-gap-concept-gender-symbols-and-royalty-free-image/1336139967?adppopup=true">designer491/iStock/Getty Images Plus via Getty Images</a></span></figcaption></figure><p><em>The <a href="https://theconversation.com/us/topics/research-brief-83231">Research Brief</a> is a short take about interesting academic work.</em> </p>
<h2>The big idea</h2>
<p>Female Airbnb hosts in the United States <a href="https://doi.org/10.1080/10696679.2022.2080715">earn on average about 25% less per year than their male counterparts</a> for their rentals, according to our new study. That’s <a href="https://www.bls.gov/opub/reports/womens-databook/2019/home.htm">slightly higher than the annual gender wage gap</a> reported by the U.S. Census Bureau and adds up to more than US$4,000 in lower earnings per year.</p>
<p>Our analysis revealed that the average nightly rate of a female host’s listing was $30 cheaper than those of male hosts.</p>
<hr>
<iframe id="noa-web-audio-player" style="border: none" src="https://embed-player.newsoveraudio.com/v4?key=x84olp&id=https://theconversation.com/female-airbnb-hosts-earn-thousands-less-per-year-than-male-hosts-185935&bgColor=F5F5F5&color=D8352A&playColor=D8352A" width="100%" height="110px"></iframe>
<p><em>You can listen to more articles from The Conversation, narrated by Noa, <a href="https://theconversation.com/us/topics/audio-narrated-99682">here</a>.</em></p>
<hr>
<p>For this research, we analyzed data taken from the public profiles of 8,000 hosts across several U.S. cities. We focused on listings with only one host and just one active listing. The name each host posted on their public profile was coded as female or male, and gender-ambiguous names were excluded.</p>
<p>To determine a host’s annual earnings, we analyzed each listing’s nightly price, number of stays per year and the average length of stay. We also looked at other factors that might contribute to the earnings gap, such as the number of guests that could be accommodated and the number of years each host had been active on the platform. </p>
<p>We also determined the difference in property values between genders by extracting data from <a href="https://www.zillow.com">Zillow.com</a> about the median home value in the ZIP code where each listing was located.</p>
<p>Our analysis revealed that the average nightly rate of female hosts’ listings was $30 cheaper than those of male hosts. Further, female hosts booked fewer reservations, and each stay typically accommodated fewer guests.</p>
<p>We found that women make up just over half – 53% – of hosts and have slightly more valuable properties than male hosts. We did not find any significant difference between the number of years female and male hosts have been active on the platform.</p>
<p>The earnings difference appears to be most prevalent when a host is renting out an entire home as opposed to offering a private room within their own residence. And while the gap narrows after controlling for many listing-related factors – such as median home value – a difference in earnings persists. </p>
<p>This suggests that we need to look beyond the Airbnb data to explain the gap.</p>
<h2>Why it matters</h2>
<p>Our research shines a light on the need to delve further into what factors may be contributing to differences in earnings between genders. </p>
<p>In the U.S., <a href="https://www.bls.gov/opub/reports/womens-databook/2019/home.htm">female full-time workers still earn about 80 cents for every dollar</a> earned by their male counterparts, and <a href="https://www.census.gov/library/stories/2019/09/payday-poverty-and-women.html">more women than men live in poverty</a>. This income shortfall also affects millions of children because according to the Census Bureau, around <a href="https://www.census.gov/library/stories/2019/09/payday-poverty-and-women.html">1 in 4 families headed by a woman</a> are poor, compared to just over 1 in 10 headed by a man. </p>
<p>Among the known reasons for this pay gap: Women are more likely than men to select jobs that <a href="https://www.aeaweb.org/articles?id=10.1257/jel.20160995">require shorter hours</a> or <a href="https://dx.doi.org/10.1257/jel.20160995">provide flexibility in scheduling</a>. Shorter hours and flexibility in scheduling are preferable for workers who have more demanding obligations at home. However, these jobs are often lower paying. </p>
<p>However, Airbnb hosts have full control of their scheduling and booking of their listings, and female hosts set their own rates. So lack of scheduling flexibility should not be a major factor in explaining why women earn less than men on the platform.</p>
<h2>What still isn’t known</h2>
<p>The most important unknown in this area of research is whether women are aware that they are offering lower prices than men.</p>
<p>Exploring whether there are gender-based earnings differences on other hospitality platforms as well, like Vrbo or Homestay, could provide new insights.</p>
<p>Also, it’s not yet clear whether or why male and female hosts take different approaches to setting Airbnb rates – although other research suggests some clues. A 2007 study found that compared to women, men <a href="https://doi.org/10.1037/0022-3514.93.4.600">negotiate for higher payments in bargaining situations</a>. And a 2009 study of gender differences in setting professional fees found that women typically charge less than men for the same services because <a href="https://doi.org/10.1016/j.obhdp.2008.11.004">they tend to be more relationship-oriented toward their clients</a>, which can lead them to charge lower prices.</p><img src="https://counter.theconversation.com/content/185935/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Even when they offer similar listings, female hosts tend to charge less than their male counterparts.Alexander Davidson, Assistant Professor of Marketing, Wayne State UniversityMark R. Gleim, Assistant Professor of Marketing, Auburn UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1911462022-09-21T23:58:48Z2022-09-21T23:58:48ZNew York’s $250 million lawsuit against Donald Trump is the beginning, not end, of this case – a tax lawyer explains what’s at stake<figure><img src="https://images.theconversation.com/files/485999/original/file-20220921-23-khyuk0.jpg?ixlib=rb-1.1.0&rect=231%2C378%2C6783%2C4196&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">New York Attorney General Letitia James announced a $250 million lawsuit against former president Donald Trump on Sept. 21, 2022 .</span> <span class="attribution"><a class="source" href="https://media.gettyimages.com/photos/attorney-general-letitia-james-speaks-during-a-press-conference-at-picture-id1425941143">Michael M. Santiago/Getty Images </a></span></figcaption></figure><p><em>New York Attorney General Letitia James hit former president Donald Trump with a <a href="https://www.nytimes.com/live/2022/09/21/nyregion/trump-fraud-lawsuit-ny-james">US$250 million lawsuit</a> on Sept. 21, 2022, citing “staggering” amounts of falsified business information and fraud.</em></p>
<p><em>The civil lawsuit alleges that Trump, his company – the <a href="https://www.trump.com">Trump Organization</a> – and three of his children lied to lenders and insurers about billions of dollars’ worth of assets. This follows a <a href="https://www.vanityfair.com/news/2022/08/letitia-jamess-trump-investigation-is-nearing-its-endgame">three-year investigation </a> into Trump’s New York-based real estate business.</em></p>
<p><em>The Conversation spoke with <a href="https://scholar.google.com/citations?user=iGSWDoAAAAAJ&hl=en&oi=ao">Bridget J. Crawford,</a> an expert on tax and property law at Pace University, to help navigate the various dimensions and the potentially broader, criminal implications of this lawsuit.</em></p>
<h2>What are Trump and his children accused of in the lawsuit?</h2>
<p>The complaint is over <a href="https://ag.ny.gov/press-release/2022/attorney-general-james-sues-donald-trump-years-financial-fraud">200 pages long</a> and contains many specific claims. But, at its heart, the complaint says the Trump Organization made false financial or business statements in order to get loans or to keep those loans on favorable terms, in a way that was dishonest or fraudulent. </p>
<figure class="align-center ">
<img alt="Vehicles pass the Trump Park Avenue building on a sunny day." src="https://images.theconversation.com/files/485984/original/file-20220921-24-c6n5wh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/485984/original/file-20220921-24-c6n5wh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/485984/original/file-20220921-24-c6n5wh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/485984/original/file-20220921-24-c6n5wh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/485984/original/file-20220921-24-c6n5wh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/485984/original/file-20220921-24-c6n5wh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/485984/original/file-20220921-24-c6n5wh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Trump Park Avenue – just how much is it worth?</span>
<span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/TrumpLegalTroubles/a2f0eeeced6e4692ad28139ee0bfbf37/photo?Query=Trump%20Park%20Avenue&mediaType=photo&sortBy=arrivaldatetime:desc&dateRange=Anytime&totalCount=29&currentItemNo=0">AP Photo/Frank Franklin II</a></span>
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</figure>
<p>Trump didn’t allegedly overestimate the cost of buildings, which is a technical term, but rather he is accused of inflating the value of certain businesses and properties. </p>
<h2>How does overstating the value of properties help Trump?</h2>
<p>Banks want to make loans to people who are likely to be able to repay them. And how does the bank measure whether someone is likely to repay? It’s knowing the recipient of a loan has enough collateral to satisfy the bank’s concerns. Trump said he had collateral worth a certain amount. James is saying that the values are really wrong, and really wrong over a period of years, in multiple different filings. Moreover, the lawsuit says this is not just a mistake, or an, ‘Oops I got it wrong.’ Rather, the attorney general alleges a systematic pattern of fraud. </p>
<h2>What should we make of this being a civil, not criminal, action?</h2>
<p>James is bringing a lawsuit regarding the Trump Organization’s compliance with <a href="https://www.nysenate.gov/legislation/laws/CVP">New York’s civil laws</a>, meaning business and lending laws and the like – hence it is a civil suit. </p>
<p>That said, James made clear that she has also referred certain matters to both the IRS and to the federal prosecutors in the Southern District of New York for criminal investigation.</p>
<p>So this being a civil lawsuit does not mean we won’t potentially see criminal charges further down the line. Just, at this point, the New York attorney general is focused on the civil law violations. </p>
<p>In other words, this could be just the beginning of a longer story. </p>
<h2>What does the lawsuit demand in way of relief?</h2>
<p>This is where it gets interesting, I believe. James is calling for very dramatic relief, including permanently preventing Trump, along with three of his children – Donald Trump Jr., Eric Trump and Ivanka Trump – from serving as a director or officer of any corporation conducting business activities in New York. It could preclude them from having any formal business ties in New York. This would be a severe blow to the family’s business interests.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/485998/original/file-20220921-26-9jazmu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A group of people dressed in formal, dark clothing stand in front of white steps" src="https://images.theconversation.com/files/485998/original/file-20220921-26-9jazmu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/485998/original/file-20220921-26-9jazmu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=480&fit=crop&dpr=1 600w, https://images.theconversation.com/files/485998/original/file-20220921-26-9jazmu.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=480&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/485998/original/file-20220921-26-9jazmu.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=480&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/485998/original/file-20220921-26-9jazmu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=603&fit=crop&dpr=1 754w, https://images.theconversation.com/files/485998/original/file-20220921-26-9jazmu.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=603&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/485998/original/file-20220921-26-9jazmu.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=603&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Former president Donald Trump and four of his children are seen at Ivana Trump’s funeral in July 2022 in New York.</span>
<span class="attribution"><a class="source" href="https://media.gettyimages.com/photos/donald-trump-melania-trump-barron-trump-jared-kushner-kimberly-picture-id1242030390">Jose Perez/Bauer-Griffin/GC Images</a></span>
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<h2>How would an IRS investigation differ from the New York one?</h2>
<p>It would be about federal tax laws, in particular. <a href="https://www.irs.gov/compliance/criminal-investigation">The IRS will</a> be looking for an answer to this question: “Did Trump overstate the valuation of any property he gave to charity?” The New York attorney general is concerned that he did.</p>
<p>The possible overvaluation relates to two different properties in Westchester, a county outside of New York City, and in Florida. What is at issue for the IRS is whether Trump correctly claimed the proper deduction, or whether he overstated, in a fraudulent way, the value of what he gave to charity. An overstatement of what he gave away would mean that the former president took a bigger income tax deduction than the one he was entitled to. Again, this is not just a matter of, “Oops, I made a mistake.” The attorney general alleges a widespread and longstanding pattern of misrepresentation of business values.</p>
<p>By handing this part of the investigation over to the IRS, the New York attorney general is signaling that she intends to stay in her lane, so to speak. James is basically saying, “I am talking about fair business practices in New York. If there is a tax issue, I am referring it over to the IRS.”</p>
<p>But all of the issues grow out of the same core set of facts and practices – how is the Trump family valuing its businesses and properties, and is it being done in a way that is honest?</p>
<h2>Does the lawsuit increase the chances of criminal charges?</h2>
<p>It certainly increases the possibility there might be criminal charges in the future. It also fans the flames that Trump continues to stoke in claiming that he is being unfairly targeted, which appears to be part of his attempt to discredit the American legal system. In fact, he is being asked to play by the same rules that apply to everyone else.</p>
<p>I will be very interested to see whether and how the IRS responds – the IRS strives to be an apolitical organization, but unfortunately, anything involving this particular former president is treated by a vocal minority as inherently political. </p>
<h2>How common is it for this type of lawsuit to happen?</h2>
<p>It is very unusual. There would have had to be evidence of an egregious pattern of fraud for any attorney general, of any political party, to file a complaint of this sort. In fact, the whole investigation, from the length of time it has taken to the amount of money involved, makes this a very uncommon case.</p>
<h2>What happens next?</h2>
<p>The New York attorney general has asked for a variety of actions, including the removal of the current trustees of certain trusts holding Trump Organization assets.</p>
<p>Trump has already responded, calling it <a href="https://www.nydailynews.com/news/politics/us-elections-government/ny-trump-fraud-allegations-ag-letitia-james-lawsuit-gop-reactions-20220921-i6324ukflfei3bd5zhlnv5jdny-story.html">a witch hunt</a>, which is consistent with the way he has responded to lawsuits in the past. I expect he will employ any available procedural tactics to delay answering this suit as long as he can. Eventually, he will be called to respond, and he will have to answer the claims put to him.</p>
<p>If he refuses to respond, the attorney general can act to protect the public, and the Trump family businesses would not be authorized to operate in New York. Ultimately, the state can shut the businesses down, if need be.</p><img src="https://counter.theconversation.com/content/191146/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Bridget J. Crawford does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>New York’s lawsuit against Trump could mean he and three of his kids are prevented from operating a business again in the state – but the IRS will determine whether federal tax crimes also took place.Bridget J. Crawford, Professor of Law, Pace University Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1891542022-09-04T00:51:04Z2022-09-04T00:51:04ZRent crisis? Average rents are increasing less than you might think<p>You wouldn’t know it from the pages of our daily newspapers, but the rate of growth in rents has been pretty modest. </p>
<p>Not everywhere, not for everyone, but for most Australians who rent.</p>
<p>According to the most recent count used by the Bureau of Statistics to compile the consumer price index, rents increased by only <a href="https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/consumer-price-index-australia/latest-release#overview">1.6%</a> in the year to June. </p>
<p>By comparison, wages climbed <a href="https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/wage-price-index-australia/latest-release">2.6%</a>.</p>
<p>Higher increases in other prices pushed the overall consumer price index up
<a href="https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/consumer-price-index-australia/latest-release">6.1%</a>. </p>
<p>Rent decreases during COVID mean that over the past five years the total increase has been just 1.5%. </p>
<p>Average rents are barely any higher than they were at the start of COVID.</p>
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<p>The Bureau gets its data direct from the computers of real estate agents, state housing authorities and the Department of Defence (for Darwin). </p>
<p>It covers rent actually paid, for a “<a href="https://www.abs.gov.au/statistics/detailed-methodology-information/concepts-sources-methods/consumer-price-index-concepts-sources-and-methods/2018/price-collection">matched sample</a>” of dwellings, meaning it refers to the same dwellings each quarter so as to record genuine price changes.</p>
<h2>Actual versus advertised rents</h2>
<p>In contrast, the media (and some <a href="https://everybodyshome.com.au/resources/housing-criticalthe-role-of-housing-in-solving-critical-skill-shortages-across-the-regions/">interest groups</a>) prefer to focus on the data for “advertised” or asking rents. These have been growing more strongly than the overall mass of rents paid. </p>
<p>Nationwide, advertised rents climbed <a href="https://www.corelogic.com.au/news-research/news/2022/residential-rents-hit-record-highs-as-national-vacancy-rates-plummet">8.2%</a> in the year to June, and by almost 18% over the five years to June on CoreLogic’s data.</p>
<p>But advertised rents are only a tiny fraction of the rents actually paid. Not all properties get advertised. Advertised rents don’t always match up with the agreed rent. Most renters remain on existing contracts. </p>
<p>Although advertised rents might be expected to relate to overall rents over time, they are not necessarily representative of the entire market.</p>
<p>Our main concern ought to be what has happened to low-income renters. </p>
<h2>Low increases for low-income renters</h2>
<p>Australia’s lowest-income renters receive rent assistance, which is pretty frugal. Single renters get no more than <a href="https://www.servicesaustralia.gov.au/how-much-rent-assistance-you-can-get?context=22206">$73 a week</a>, and very large families up to $97.</p>
<p>But the typical rent paid by Australians on rent assistance hasn’t increased much. Over the year to June, the median rent for rent assistance recipients climbed by 1% – roughly $5 per week. Over the past five years it has increased 9% – somewhat less than the increase in the consumer price index of 10.7%.</p>
<p>Over the longer term, low-income rents have increased more sharply. Households in the bottom 40% of income distribution used to spend around 22% of their after-tax income on rent, and now spend about 30%, down from a peak of 32%.</p>
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<p>If there is a crisis in rents, the figures suggest it is not widespread.</p>
<p>Rents in locations including Perth and Darwin are climbing much more strongly than others as they come off long periods of negative rent growth.</p>
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Read more:
<a href="https://theconversation.com/renters-spend-10-times-as-much-on-housing-as-petrol-wheres-their-relief-180702">Renters spend 10 times as much on housing as petrol. Where's their relief?</a>
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<p>The growth in asking rents is most pronounced away from the cities, in particular in holiday and tree-change destinations such as Richmond-Tweed (including Byron Bay), Gold Coast, Sunshine Coast and Wide Bay. </p>
<p>Some were experiencing strong growth in asking rents before COVID, which accelerated through COVID.</p>
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<p>Other regions, including parts of Sydney and Melbourne, have experienced subdued or <a href="https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/consumer-price-index-australia/latest-release#overview">negative</a> growth. </p>
<p>Across all renting households we are yet to see any serious growth. To date, the “rent crisis” has been felt mainly in a few specific locations and among people looking for new rental properties.</p><img src="https://counter.theconversation.com/content/189154/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ben Phillips does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The big increases quoted are for “asking rents”. The rents paid by existing renters are climbing more slowly.Ben Phillips, Associate Professor, Centre for Social Research and Methods, Director, Centre for Economic Policy Research (CEPR), Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.