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Toward a history of housing market analysis
Abstract
Purpose
This paper aims to relate early history of housing conceptualizations and market analysis in the Anglosphere (Britain, the USA, Canada, Australia and New Zealand). Historians are ignorant of them but clear market analyses had early beginnings in every urban society for developing and accommodating growing populations.
Design/methodology/approach
Historiography.
Findings
Aspects of market analysis, especially appraisal and rudimentary approaches to the housing market in the Anglosphere, can be traced back to ancient Rome, housing market conceptualizations to Dr Nicholas Barbon and seventeenth-century London’s first population and housing boom and market analysis techniques in the USA at its founding, when Charles-Maurice de Talleyrand Perigor was the first to refine them and write them up in 1794-1796. The US next made major advances in the 1930s. The overall trend has been from inferred analyses to fundamental (derived) analyses, emphasizing “quantifiable data.”
Practical implications
This paper elicits researcher’s professional awareness that each nation has an implicit history of its early development practices and techniques.
Originality/value
The time frame of most housing market analysts is the recent past, the present and the future. But how enduring are their concerns? Do operational values in a housing market reflect historical epochs, or are there some universalities? Furthermore, most urban historians are ignorant of urban market dynamics. It does not occur to them that some of the dynamics that analysts attempt to capture today might always have been inherent in the urban built environment, regardless of era or urbanized part of the globe under consideration.
... Calculated on a per person basis the ranking is slightly different because of variations in household size: United States (61 m 2 /656 ft 2 ), Canada (57 m 2 /618 ft 2 ), and Australia (51 m 2 /549 ft 2 ) (Neamt 2017). 3 These similar outcomes are attributable to widespread land availability in the Anglospheric settler societies (sometimes referred to as CANZUS) and to historical idiosyncrasies in the appraisal and valuation of property in these countries (Baer 2018). ...
Housing plays a significant role in impelling demand for natural resources and driving economic growth in high-income countries. Public policies, commercial prerogatives, and other inducements have encouraged construction and occupancy of ever-larger homes and this pattern has persisted in the face of decreasing household size, declining fertility, ageing populations, and increasing complexity of domestic relationships. This situation has created a perverse mismatch between available housing stocks and residential requirements. Additionally, imperatives to curtail greenhouse-gas emissions and to hasten progress on the United Nations 2030 Agenda demand new planning priorities. Building on the sufficiency turn in the field of sustainable consumption, this paper first formulates parameters for estimating an environmentally tenable and globally equitable amount of per person living area. It then highlights five emblematic cases of “space-efficient” housing. While acknowledging that prevalent spatial norms are evolving, the conclusion discusses the profound challenges of achieving a successful sustainable consumption transition.
... As noted above the term 'housing submarket' was popularised by Grigsby (1963). This earliest use was based on the economic concept of substitution developed by Rapkin et al. (1953) . Substitutability, in this sense, requires demanders to be (relatively) indifferent between the entire bundle of physical, locational and neighbourhood quality attributes which characterise the competing housing units. ...
In the 1950s and 1960s a group of housing economists at Columbia University developed a framework for the analyses of urban housing markets which was based around the concept of housing submarkets and household migration. There is now widespread agreement amongst housing economists that submarkets should be adopted as a working hypothesis but the concept has been reformulated in terms of intra‐urban relative house price differentials. The accepted test for submarket existence uses a hedonic model of house prices which assumes market equilibrium. This paper returns to an analysis of submarkets which focuses on spatial migration patterns. By examining household intra‐urban mobility patterns in the Glasgow housing market it is possible to demonstrate that submarkets tend to be self‐contained. The analysis also suggests that the current standard statistical tests may be incomplete and in the case of Glasgow underestimate the number of submarkets.
This dissertation provides an investigation into the confluence of three basic themes; geography, land values, and municipal taxation. This research examines the role of geography as it applies to addressing the inherent structural problems of the municipal property tax system, which result in inequities in municipal tax burdens. These structural problems are caused, in part, because traditional specifications of mass appraisal models are unable to sufficiently incorporate the impact of geography and because the property tax system is based more heavily on the value of capital improvements, such as buildings, than the value of land. Convincing evidence suggests a municipal taxation system based more heavily on the value of land could help mitigate many negative consequences of the property tax; thus, this research examines a spatial paradigm for the estimation of urban land values in order to study the short-run implications of transitioning to a land value tax system. ^ After reviewing geography's contribution to the professional practice of real estate appraisal, this dissertation describes a spatial decision support system (SDSS) that was used to extract and validate sales of vacant land from the population of real estate transactions that occurred in Hamilton, Ontario between 1995 and 2004. Vacant land transaction prices were used to explore the spatial dynamics of land price appreciation and depreciation rates, investigate the potential for spatial models to improve the accuracy and fairness of mass appraisal, and to simulate the spatial distribution of shifting tax liabilities for residential land uses under the property tax and land value tax systems in order to examine their relationship to area-based deprivation indices. Results suggest there remains much potential for geography to make significant contributions to assessment practice, municipal taxation, and urban planning. Furthermore, there is much potential for land value taxation to contribute to equitable and sustainable cities.^
Since the 1980s UK academics have promoted the use of multiple regression analysis in property valuation. Recently, however, there has been growing recognition that regression models will be subject to aggregation bias if they fail to accommodate the existence of housing market segmentation (submarkets). In this study, we compare the empirical performance of a standard hedonic house price regression model for the city of Glasgow with a segmented model which recognises the importance of understanding the underlying market structure and, in particular, the existence of submarkets for different dwelling types. The results show that the (weighted) standard error of the segmented model is significantly lower than that of the market wide model. Consequently, we propose a two-stage approach to the application of MRA techniques to residential valuation. First, following traditional institutional analysis of housing markets, the market should be subdivided into distinct structurally differentiated market segments. These segments can usefully be identified by principal components factor analysis which allows the identification of the most important common components in the housing bundle. Second, separate house price equations should be estimated for each market segment. Although the best-fit equation may vary from sector to sector this is likely to reflect the behavioural realities of the property market, and will provide the basis for more accurate valuations.
In this paper, it is argued that neo-classical location theory is of limited value in conceptualising the structure of urban office markets. Rather there are sound theoretical and technical arguments for segmenting office markets into distinct submarkets. It is further argued that submarkets, rather than being based on prior knowledge of agents or researchers, should be derived empirically. As an illustration the authors use principal components analysis and cluster analysis to construct office submarkets. The results reported are based on the analysis of a unique dataset of asking rents, physical and locational characteristics of properties on the market in the cities of Glasgow and Edinburgh in the 1990s. From the empirical evidence, it is clear that different factors are important in influencing the structure of the office market in Scotland’s major urban centres.
This paper offers an interpretation of how housing markets work which complements more traditional economic approaches. Building on a wider movement within cultural economy and economic sociology, it considers how (housing) markets are variously performed in the power-filled negotiations of buyers, sellers and market professionals. This is part of a larger undertaking, but here the focus is particularly on the role of legal, financial and information intermediaries in shaping local cultures of property exchange. This is a social rather than economic analysis of housing markets; it is a qualitative rather than a quantitative study. It is designed to shed light on how markets are made, though it might, in the end, change the way they are modelled.
The world has still to emerge fully from the housing-triggered Global Financial Crisis, but housing crises are not new. The history of housing shows long-run social progress, littered with major disasters; nevertheless the progress is often forgotten, whilst the difficulties hit the headlines. Housing Economics provides a long-term economic perspective on macro and urban housing issues, from the Victorian era onwards. A historical perspective sheds light on modern problems and the constraints on what can be achieved; it concentrates on the key policy issues of housing supply, affordability, tenure, the distribution of migrant communities, mortgage markets and household mobility. Local case studies are interwoven with city-wide aggregate analysis. Three sets of issues are addressed: the underlying reasons for the initial establishment of residential neighbourhoods, the processes that generate growth, decline and patterns of integration/segregation, and the impact of historical development on current problems and the implications for policy.
Although medieval rentals have been extensively studied, few scholars have used them to analyse variations in the rents paid on individual properties within a town. It has been claimed that medieval rents did not reflect economic values or market forces, but were set according to social and political rather than economic criteria, and remained ossified at customary levels. This article uses hedonic regression methods to test whether property rents in medieval Gloucester were influenced by classic economic factors such as the location and use of a property. It investigates both ordinary commercial rents and burgage rents (landgable), and explores the relationship between the two. It also examines spatial autocorrelation. It finds significant relationships between ordinary rents and property characteristics that are similar to those found in modern studies. The findings are consistent with the view that, in late medieval Gloucester at least, ordinary rents were strongly influenced by classical economic factors working through the urban property market. The findings also suggest that burgage rents reflected economic factors, even though they remained fixed over time.
Famine as a historical phenomenon has attracted considerable scholarly attention in recent decades, especially since the publication of Amartya Sen's now-classic Poverty and Famines in 1981. Roughly speaking, we can identify two main scholarly camps or schools of thought: 'constitutionalist' and 'environmentalist'. The 'institutionalists' contend that famines tend to be, to a large degree, man-made phenomena, and that nature is of sceondary importace. Thus Sen argues, using the example of the Bengal famine of 1942-3, that in many cases famines occur not because of an absolute lack of food resources but because of a decline in 'entitlements' to (depleted) food resources.
Past & Present 190 (2006) 35-81
Over the past two decades there has been an impressive escalation in the literature surrounding the marked economic and commercial growth that characterized the two centuries or so before the advent of the Black Death. This period of growth occurred on a virtually global scale, in that, at the very least, it involved a great swathe of interconnected trading networks stretching from China to the British Isles. For Europe this has been described in a number of important publications, such that 'commercialization' is now widely accepted as a valid characterization of the growth of the economy during the twelfth and thirteenth centuries. As John Hatcher and Mark Bailey have pointed out recently, however, commercial models for the Middle Ages suffer from a certain theoretical immaturity:
This article aims to address the critique of Hatcher and Bailey by providing a more logical formulation for medieval commercialization, particularly through a tighter elaboration of the mechanisms by which society and commercial opportunity interacted to produce population change. We are restricting our analysis here to England — a country for which an unrivalled wealth of documentary materials for issues relating to the medieval economy has survived — during the two centuries leading up to the arrival of the plague, but we recognize that much of what we are saying has application for other periods, as discussed in the conclusion, and undoubtedly for many other parts of Europe, if not elsewhere, during pre-industrial times. Put baldly, our argument is that there was a powerful conjunction between entrepreneurial activity and population growth, and that the former tended to lead the latter. Also central to our argument is the belief that the current scholarly emphasis on the real wages of individuals has given an unduly negative view of how this economic growth affected society at large, and that total yearly family income is probably a much better, and certainly more optimistic, indicator of medieval society's well-being.
One of the problems of setting 'commercialization' in a suitable theoretical framework is that it is such a diffuse, all-embracing concept that it is difficult to grasp intellectually, and certainly in its relationship to population growth. All considerations of commercialization must start with classical writers such as Adam Smith, David Ricardo and Thomas Malthus, but, even here, the internal logic that underlies commercialization is not inherently obvious. Part of the problem perhaps lies in the insufficient distinction between those exogenous forces that impinge upon commercialization — either positively or negatively — and those endogenous elements central to the process of commercialization itself. Here we label these forces as 'externals' and 'internals'. 'Externals' are those mostly unplanned happenings that encourage or forestall economic activity. They include war, disease, weather, sudden discovery or depletion of precious metals (particularly when such precious metals are drawn from sources outside the state or country), and injudicious state intrusion, especially in such things as excessive taxation or purveyance (that is, the expropriation of food and other supplies for various royal purposes, especially for the king's armies in times of war). All these, by and large, are imposed upon the process of economic development, and particularly entrepreneurship, rather than being internal to it. Indeed, in the medieval context, it is often held possible to describe the fortunes of the economy solely in terms of these externals, as historians with a monetarist bent have sometimes sought to do. Thus the period of growth from, say, the late twelfth century to the beginning of the fourteenth might be explained in terms of relative peace, a relatively disease-free environment, better weather conditions and the discovery of new sources of silver; while the downturn over the fourteenth and fifteenth centuries might be explained...
In Rome of the early empire, most of the residential population lived in rented apartments ( cenacula ). Only the privileged few could afford single-family dwellings; the character of this minority is vividly illustrated in Juvenal's famous line on Nero's persecutions: ‘rarus venit in cenacula miles’ (10. 18). Almost all of the non-privileged many, if they could afford accommodation, were obliged to dwell in buildings that they did not own, in exchange for rent that our sources agree was exorbitantly high.
However, not everyone in the tenant class was on equal footing, despite recent suggestions to the contrary. The range of accommodation regularly available to the urban masses was, as will be shown below, quite varied, though this range was often effectively limited by the wealth and other social characteristics of the prospective tenant. The rental market of Rome can be reconstructed from three kinds of sources: literary references to rental; the types of rental situations described in legal texts; and the archaeological remains of apartment houses, particularly those in Ostia. These sources converge to suggest a model of the urban rental market that is rather more complex than the one which has appeared in recent scholarship. It must be stressed, however, that the new model suggested below is still just a model, and that variations from it must have been numerous. For instance, no ancient authority conclusively demonstrates that a lease like the typical modern American lease (an apartment taken on a year term for exclusive occupancy of the tenant and his dependants, with monthly payment in advance and many services supplied by the landlord) was legally impossible in antiquity, or was not in fact developed; but the Roman leases actually described in the extant sources are markedly different, and the ruins of Ostian apartment houses seem to accord well with the leases to which these sources refer.
Little has been written about urban property investment in seventeenth-century London. Market norms for investors were developed in a relatively unregulated environment, and in response to surging urban growth. "Pattern books" (manuals of design, measuring, and building) provided information to investors, helping them to evaluate an assorted set of properties. While the methods of investment described in these books were initially rudimentary, there is evidence of increased sophistication in the latter part of the century. The gradual institutionalizing of real estate practices helped to attract the necessary capital to finance London's remarkable physical growth.
Following an earlier explanation of planning practices in various cities on the Continent, with their emphasis on expansion, this second paper examines more closely England's century-long experiment with growth prohibitions for London to combat plaque and urban unrest. Even with the prohibitions there was no slackening in building. Later, certain exceptions to building prohibitions in London evolved toward regulations for safety and aesthetics. By 1680, London's growth became tolerated, if not planned for, though the suburbs were still not incorporated into the City of London despite having substantially surpassed it in population. The basic arguments and professional/technical responses to all this building were much like today's, helping planners to reflect upon their own present-day efforts in these regards.
The valuation of property in the roman law
Top 10 nation-building real estate deals”, available at: Smithsonian.com
- T A Frail
Origin and development of a continuous real property inventory