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The Popularity of Single-Family Housing in Real Estate Development Activity in the Light of the Pandemic – the Case Study of Łódź

Authors:
Agata Antczak-Stępniak at University of Łódź
Agata Antczak-Stępniak
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Theoretical background: The functioning of the entire housing market and the sale of developer dwellings depends on many factors. They are, e.g. economic and financial, institutional, environmental, cultural, and religious. Due to the complexity of the real estate market and the variety of factors that influence its functioning, the real estate market is characterized by high variability. Some external factors, especially those difficult to predict, may cause rapid changes in the size of this market. Epidemics can be such a factor. Recently, the COVID-19 pandemic has significantly impacted the functioning of many housing markets. Since we spent whole days at home with whole families, it soon turned out that the previous places of residence needed to be bigger, functional, and properly located. Therefore, in many places worldwide, the demand for single-family houses has increased, contributing to the growing sale of such developer projects. The pandemic, however, has passed, but its effects, along with the consequences of the war in Ukraine, also affect the standard of living of the population and real estate development activity, although it seems to be in a different way. Purpose of the article: In connection with the above, two research objectives have been set in this article: to determine the impact of the pandemic on real estate development activity in the Polish housing market and to analyze, on the example of Łódź, whether the pandemic contributed to changes in developers’ offers and level of sale, especially in the context of single-family investments. Research methods: In order to achieve the set goals, the desk research method was used. First, based on statistical data of the Local Data Bank situation on the primary residential real estate market was analyzed (in Łodź). Then, the number of investments implemented in Łódź, broken down into multi-family and single-family housing, was examined (based on data collected by the author from real estate portals and websites of individual developers). Concerning single-family housing, investment commencement, and completion dates were identified and finally, based on the starting dates, single-family investments were divided according to the level of sale. Main findings: The outbreak of the COVID-19 pandemic has “turned on its head” housing markets in many parts of the world. Overnight, entire households switched to remote work or learning, which was difficult to reconcile, especially in small dwellings. Difficulties in functioning partly prompted and partly forced to look for other, more suitable places to live. Because of that, developer projects concerning single-family houses sold very well during the pandemic. However, it seems that the increase in popularity (sale) of single-family investments offered by developers was temporary. The increase in interest rates resulted in a decrease in demand for large dwellings, which few people can afford anymore, and they are not an attractive investment for investors. So, developers have frozen capital, which, unfortunately, with the loans taken out, may, in the long run, lead to the risk of debt growth and bankruptcy of smaller enterprises.
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ANNALES
UNIVERSITATIS MARIAE CURIE-SKŁODOWSKA
LUBLIN – POLONIA
VOL. LVII, 4 SECTIO H 2023
DOI:10.17951/h.2023.57.4.7-22

agata.antczak@uni.lodz.pl


ORCID ID: http://orcid.org/0000-0002-5858-2774
The Popularity of Single-Family Housing in Real Estate
Development Activity in the Light of the Pandemic –
theCaseStudyofŁódź
Keywords:
JEL:
How to quote this paper:
    Annales
UniversitatisMariaeCurie-Skłodowska,sectioH–Oeconomia, 57(4), 7–22.
Abstract
Theoretical background: 
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Purpose of the article: 

Pobrane z czasopisma Annales H - Oeconomia http://oeconomia.annales.umcs.pl
Data: 05/01/2024 13:29:10
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Research methods: 
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    

  

divided according to the level of sale.
Main ndings:    
 

-

    



Introduction




 


  
-
-






 

 

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  
Pobrane z czasopisma Annales H - Oeconomia http://oeconomia.annales.umcs.pl
Data: 05/01/2024 13:29:10
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   
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













Pobrane z czasopisma Annales H - Oeconomia http://oeconomia.annales.umcs.pl
Data: 05/01/2024 13:29:10
10 



 
 -




 

Literature review
-





  -
  
  


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

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





  

-
Pobrane z czasopisma Annales H - Oeconomia http://oeconomia.annales.umcs.pl
Data: 05/01/2024 13:29:10
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    


-


-




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  
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 
Pobrane z czasopisma Annales H - Oeconomia http://oeconomia.annales.umcs.pl
Data: 05/01/2024 13:29:10
12 

  







 





Research methods





-



  
 
-


in the analysis.
 -
  
 





Pobrane z czasopisma Annales H - Oeconomia http://oeconomia.annales.umcs.pl
Data: 05/01/2024 13:29:10
13
    







  
according to the level of sale.
-

 




 
-



-
czworak.



Results
Diagnosis of the conditions for the growth of real estate development activity in Łódź in
2019–2022
 



  


-

Pobrane z czasopisma Annales H - Oeconomia http://oeconomia.annales.umcs.pl
Data: 05/01/2024 13:29:10
14 
 

-



-
 







Figure 1.22




2


Pobrane z czasopisma Annales H - Oeconomia http://oeconomia.annales.umcs.pl
Data: 05/01/2024 13:29:10
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    
Figure 2.2

  -
 

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
Figure 3.22

Pobrane z czasopisma Annales H - Oeconomia http://oeconomia.annales.umcs.pl
Data: 05/01/2024 13:29:10
 

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
Figure 4.
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
Pobrane z czasopisma Annales H - Oeconomia http://oeconomia.annales.umcs.pl
Data: 05/01/2024 13:29:10
17
    
Sales level of single-family houses in developer investments in Łódź – own research


Table 1.
     
  118 108 104 124 127
Share      
 21 21  25 45 53
Share      
 0 0 1 0 0 0
Total 107 139 135 129  180
Total share      

Detached 2 2 2 2 2 5
 512 12 24 27
Terraced 12 11 10 9 13 
 22425







 


-



  

 




Pobrane z czasopisma Annales H - Oeconomia http://oeconomia.annales.umcs.pl
Data: 05/01/2024 13:29:10
18 
Table 2.
Start year   
2019 and earlier 8 2021 and earlier 8
2020 7 2022 17
2021 18 2023 19
2022  2024 5
Total 49 49


-





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 
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Tabel 3.
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Pobrane z czasopisma Annales H - Oeconomia http://oeconomia.annales.umcs.pl
Data: 05/01/2024 13:29:10
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    




Discussions and Conclusions



 








  






 -


 









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Pobrane z czasopisma Annales H - Oeconomia http://oeconomia.annales.umcs.pl
Data: 05/01/2024 13:29:10
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-
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

  

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  Real
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Bulletin of Geography. Socio-economic Series47doi:10.2478/bog-2020-0008

Environmental & Socio-economic Studies10
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    
outlook. Financial Markets and Portfolio Management35doi:10.1007/s11408-021-00384-6
 -
  Regional Science and Urban Economics95
doi:10.1016/j.regsciurbeco.2022.103774
Thehousingmarketandurbanresidentialstructure:areview

     -
 Annales Universitatis Mariae Curie-Skłodowska, sectio H – Oeconomia 53 
doi:10.17951/h.2019.53.4.7-20

  Jakościowe BadaniaPe-
dagogiczne2
  
International,Regional ScienceReview42
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
Journal of Risk and Financial Management14
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Inwestycjedeweloperskie
Pobrane z czasopisma Annales H - Oeconomia http://oeconomia.annales.umcs.pl
Data: 05/01/2024 13:29:10
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    
MPRA Paper
No. 102475
Location,Location,Location:APlantLocationandSiteSelectionGuide. Routledge.
     
Urban Science 5
doi:10.3390/urbansci5010023
-
Academia4doi:10.24425/academiaPAN.2020.136169
BIS Working Paper No.
259
-

ScienticResearch

Journal of Urban Economics123doi:10.1016/j.jue.2021.103333
   
Journal of Housing Economics59:10.1016/j.jhe.2022.101908
Siećryzykainwestycyjnegonarynkunieruchomości
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
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Journal of Housing and the Built Environment37
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International Journal of Environmental Research and Public Health18.
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StudiaMedioznaw-
cze2
 
Strategieinwestowanianarynkunieruchomości

ReviewofCorporateFinanceStudies,4doi:10.1093/rcfs/cfv001
 PodsumowanieLockdown-u wPolsce
 -

Land 11
doi:10.3390/land11101612
Coronavirus disease 2019 (COVID-19). Situation Report – 94


SN Business & Economics 2doi:10.1007/s43546-022-00225-2
Pobrane z czasopisma Annales H - Oeconomia http://oeconomia.annales.umcs.pl
Data: 05/01/2024 13:29:10
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Remote Work Dynamics and Its Influence on U.S. Urbanization Patterns: A Review
Article
  • Jan 2024
This study explores the transformative impact of remote work dynamics on U.S. urbanization patterns, delving into how the shift towards telecommuting is reshaping urban and suburban landscapes. With the COVID-19 pandemic accelerating the adoption of remote work, this research aims to understand the subsequent changes in residential preferences, real estate dynamics, economic structures, and environmental sustainability. Employing a systematic literature review and content analysis as its methodology, the study synthesizes findings from peer-reviewed journals, government reports, and industry publications to offer a comprehensive overview of current trends and future projections. Key insights reveal a significant migration towards suburban and rural areas, driven by the desire for more spacious living conditions conducive to remote work. This shift is accompanied by a reevaluation of urban spaces, highlighting a decreased demand for traditional office buildings and an increased interest in flexible, mixed-use developments. Furthermore, the reduction in daily commuting associated with remote work presents notable environmental benefits, including lower carbon emissions and improved air quality. The study projects that the long-term impact of telecommuting will lead to further decentralization of the workforce, necessitating adaptive urban planning and policy frameworks. Strategic recommendations are provided for policymakers, businesses, and urban developers to support sustainable telecommuting practices. Areas for further research are identified, emphasizing the need for ongoing investigation into the social, economic, and environmental implications of remote work. This research contributes to the discourse on urban development, offering insights into the evolving relationship between work practices and urbanization in the era of telecommuting.
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Changes in the geography housing demand after the onset of COVID-19: First results from large metropolitan areas in 13 OECD countries
Article
Full-text available
  • Apr 2022
The paper introduces a novel, granular house-price dataset sourced from a network of public and private data providers. It offers the first results of investigations into changes in the urban geography of housing markets following the COVID-19 pandemic. The rapid rise of working from home practices is likely to incentivise many people to seek more space and accept living further away from city centres as commuting requirements are reduced. The paper's results indicate that housing demand might have indeed shifted away from the centres to the peripheries of many large urban areas. These early results also show that such a shift has been neither universal nor uniform. It is typically stronger in cities where pre-COVID-19 house price disparities were larger and where moving to the periphery provides significantly better access to green space while still allowing easy access to high-speed internet and/or where COVID-19 restrictions were more stringent. The paper concludes by discussing implications for policy, including the benefits of flexible settings that allow supply to adjust smoothly to new demand patterns and outlining avenues for future work planned to improve and capitalise on the new dataset.
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The Impact of War and Pandemic Crises on the Sovereign Creditworthiness and Solvency. The Position, Role and Decisions of International Rating Agencies
Article
Full-text available
  • Apr 2023
Theoretical background: The sovereign creditworthiness and solvency in the context of the pandemic and war crises is one of the biggest challenges that the modern world and the financial market face. It has a key impact on the basic economic indicators, including the price of debt incurred by individual countries and, thus, the profitability of debt securities. The COVID-19 pandemic, which began at the turn of 2019 and 2020, and Russia’s aggression against Ukraine which started on 24 February 2022, have strongly impacted the level of debt of European states and other countries of the world. The energy crisis, which is currently growing, is also taking its toll on the main economic indicators. International credit rating agencies are institutions that have been analysing the sovereign creditworthiness and solvency and individual business entities for many decades. At times, their activities have been the subject of criticism, but their place in the global financial market seems unthreatened and the results of their work still constitute the basic indicator of creditworthiness and solvency evaluation. Purpose of the article: The purpose of this article is to present issues related to the impact of war and pandemic crises on the sovereign creditworthiness and solvency and also the position, role and decisions of international rating agencies. Due to the ongoing war in Ukraine and the COVID-19 pandemic, these are very important issues that have a real impact on the economic condition of individual countries as well as the standard of living of citizens. This article focuses on these elements of the contemporary reality. Research methods: The subject matter and purpose of the article have been illustrated against the background of current theoretical knowledge, historical research and the latest analyses of key economic indicators, such as inflation or bond yields. The study of the impact of wars on sovereign ratings was empirical. To visualise the historical scale of the wars and pandemics destruction, in the analytical part of the study, statistical data has been re-scaled to the current global population. Main findings: The research conducted in this article has indicated that crises related to a pandemic and war have a negative impact on the sovereign creditworthiness and solvency. Historical studies of armed conflicts and pandemics have shown that the former had a significantly greater impact on inflation and bond yields. For example, the level of inflation started to drop within one year after the end of the wars and almost immediately after the end of the pandemic. The same applied to bond yields. Of course, this was directly reflected in the evaluations of international rating agencies. The issues discussed in the article are of practical application, because the on-going war in Ukraine and the COVID-19 pandemic have had a very large impact on the global economy and the financial condition of individual countries. Our research also shows that the war hit the ratings of sovereign countries directly involved in the war, while other countries’ ratings (possibly threatened by aggression from Russia in the future – e.g. EU countries) remain stable.
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Impacts of Crisis on the Real Estate Market Depending on the Development of the Region
Article
Full-text available
  • Mar 2023
The article compares the effects of crisis on the real estate market in two regions of the Czech Republic that differ from a macroeconomic point of view. The region of Prague represents the rich and developed region while the Karlovy Vary region struggles with many socio-economic and structural problems. An analysis was performed for the time period of 2018 to 2022. It analyzed the development of apartment prices in both regions, the availability of housing, the turnover of the real estate market in terms of the number of apartment sales, the development of liens on real estate, the number of apartment transfers from state property to private ownership, and the development of the number of real estate foreclosures. The basis for creating statistical outputs is the EVAL software, which was developed by one of the co-authors of this article. The EVAL software collects price offers of apartments offered for sale and rent throughout the Czech Republic and collects publicly available data from the cadastral office. The authors found that the real estate market experienced a significant turnaround in the volume of mortgage loans granted in 2022. This decline led to a significant drop in the total volume of real estate transactions. The findings suggest that potential buyers should wait for property prices to drop before buying, while rental property owners and investors can take advantage of the increased demand for properties.
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The role of real estate development activity in the re-urbanization of cities – a case study of Łódź, Poland
Article
Full-text available
  • Dec 2022
The suburbanization of cities began in many countries after World War II and was caused, among other things, by the growing popularity of the motor car, the development of transport networks, and the growth in human populations. In post-socialist countries, this process started later (mainly after the collapse of socialism). Suburbanization was often an uncontrolled phenomenon (due for instance to an ineffective urban spatial policy), which contributed to urban sprawl, and in which developers played a significant role. The growing costs of city maintenance have prompted local authorities to undertake planned activities for re-urbanization. The increase in development activities in recent years encourages reflection on their importance in these processes. This article aims to outline the role of developers, responsible for the new construction and the reconstruction of existing facilities, in the process of city re-urbanization, using the city of Łódź, Poland, as a case study. It is an example of a post-industrial city in which, the process of suburbanization, combined with the phenomenon of urban sprawl, proceeded rapidly after 1989. The phenomenon of depopulation has also been observed in Łódź for several years. Therefore, re-urbanization may be an antidote to some of Łódź’s population and spatial problems. The methods of desk research and a case study were used to achieve the aim.
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Literature Review: The Effects of Covid-19 Pandemic-Driven Home Behavior in Housing Preference
Article
Full-text available
  • Nov 2021
This literature review is aimed to identify the possible correlation between Covid-19 pandemic and housing preferences. It is known that the pandemic has impacts on human activities and this also has an indirect effect on housing selection. We used a qualitative method by reviewing 52 papers and articles related to pandemic and residential real estate from March 2020 to May 2021. The review indicates that Covid-19 pandemic has induced to the housing preferences: fear of meeting people, fear of economic recession, and ‘stay at home’ lifestyle. The pandemic increases people’s needs to control their living space, including personal safety space, house expense, and the use of home space. This review will benefit real estate developers in Indonesia as reference of lifestyle regarding healthy residential building especially in the post-pandemic future.
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The Effect of Flood Risk on Residential Land Prices
Article
Full-text available
  • Sep 2022
Floods are one of the most frequent natural disasters today. Hence, it is highly important to explore the effect of flood risk on residential land prices to promote the rational allocation of land resources and incorporate climate change risk control into territorial spatial planning. This paper takes the primary urban area of Hangzhou as an example, based upon data from 424 residential land plots. With spatial autocorrelation analysis and the Spatial Durbin Model (SDM) approach, the spatial effect of flood risk on residential transaction land price was investigated. The results show that, ceteris paribus, plots with high risk of flooding suffer a price discount of 8.62%. The unique mechanism of the way flood risk affects land prices was discussed further from the perspectives of land ownership and land price systems in China. Furthermore, when the land price in surrounding areas increases one percent, the land price in the area will increase 14.32%. The spatial spillover effects of land price were analyzed with the flood information disclosure system and the stakeholders’ considerations in land price comparison. The effect of flooding on residential land prices in Hangzhou is the result of government regulations and market allocations, which are fundamentally different from those of the free market allocations in many western countries. Interestingly, the risk of flooding is capitalized into the price, whether it is determined by government or market pricing. Integrating flood risk into land price determination can help promote the optimal allocation of land resources and minimize depreciation attributable to flood disasters.
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The Role of Government in the Housing Market
Article
Full-text available
  • Dec 2016
Nowadays one of the most intensely debated subjects in economics is government intervention in real estate market. Proponents of the free market system assert that government intervention should be strongly limited still others assert there are well-grounded reasons for government intervention. In this article the most common methods and forms of government intervention in real estate market such as legislation, subsidies, taxation, zoning, rent control, minimum and maximum price policies, licensing of market participants, transaction costs and procedures, banking system, restrictions on the involvement of financial institutions in real estate market have been observed. In practice, each government uses these intervention methods with the choice of method depending on factors such as the political slant of the government, the levels of economic and institutional development, et cetera. Some countries even issue residence permit and citizenship foreigners who invest in the housing market. We find government intervention necessary, given the unique characteristics of real estate and the role that it plays in economic and social progress.
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Impact of the COVID-19 pandemic on the housing market at the epicenter of the outbreak in China
Article
Full-text available
  • May 2022
The outbreak of the COVID-19 in January 2020 has had a profound impact on the global economy, so it is important to study the impact of the pandemic on the housing market. To investigate the impact of the pandemic on the housing market and the response of the housing market, this paper first uses the hedonic price model to compile the second-hand housing price index in Wuhan and its neighboring capital cities and then uses the difference-in-difference (DID) model to conduct a comprehensive study on new commercial housing and second-hand housing market. In addition, this paper also uses the VAR model to explore the housing market's response to the epidemic situation. The results show that the negative impact of the pandemic on the housing market is mainly reflected in the volume and area of housing transactions, with little impact on housing prices. Second, the reported cases of COVID-19 have a negative impact on the housing market in the short term, which gradually weakens with time and disappears after three weeks. This paper's findings indicate that the epidemic's impact on the housing market is mainly due to the real estate enterprises stopping selling houses and local governments implementing home quarantine measures, which affect normal housing transactions. However, the COVID-19 pandemic did not greatly negatively impact consumers' demand and confidence in buying houses, so the house prices remained stable overall. Supplementary information: The online version contains supplementary material available at 10.1007/s43546-022-00225-2.
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Stuck at home: Housing demand during the COVID-19 pandemic
Article
  • Dec 2022
  • J HOUS ECON
The COVID-19 pandemic induced an increase in both the amount of time that households spend at home and the share of expenditures allocated to at-home consumption. These changes coincided with a period of rapidly rising house prices. We interpret these facts as the result of stay-at-home shocks that increase demand for goods consumed at home as well as the homes that those goods are consumed in. We first test the hypothesis empirically using US cross-county panel data and instrumental variables regressions. We find that counties where households spent more time at home experienced faster increases in house prices. We then study various pandemic shocks using a heterogeneous agent model with general equilibrium in housing markets. Stay-at-home shocks explain around half of the increase in model house prices in 2020. Lower mortgage rates explain around one third of the price rise, while unemployment shocks and fiscal stimulus have relatively small effects on house prices. We find that young households and first-time home buyers account for much of the increase in housing demand during the pandemic, but they are largely crowded out of the housing market by the equilibrium rise in house prices.
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