Housing market

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Factors of rent formation

On the housing market , supply and demand for the good apartment meet .

General

The housing market decides who lives where and how. Therefore, this market has always not only been in the focus of microeconomics , but urban sociologists and geographers also deal with the resulting socio-spatial structure . The task of housing policy is to prevent social tensions by appropriately intervening in the housing market.

Depending on the scientific perspective and political convictions, different models are favored to describe and explain the mechanisms of the housing market.

Housing market models

The market model of microeconomics

The simplest general market model looks at a single good and how its price comes about from a microeconomic perspective . An equilibrium price is postulated that results solely from the relationship between the quantity offered and demanded (in short: between supply and demand ). Once the price has been set, short-term deviations will immediately lead to adjustment processes:

a) If the price of a commodity rises, this drives its supply upwards (its demand downwards) until the resulting oversupply leads to a price reduction again.
b) If the price falls below the assumed equilibrium point, the supply falls (demand increases); there is an excessive demand that causes the price to rise again.

The mathematically clear conciseness of this model results from its circular structure, from the fading out of production costs and utility value and, last but not least, from a series of extremely stringent premises that define a so-called perfect market :

The following are required:

  1. Complete transparency , i.e. i.e. everyone is fully informed;
  2. free competition , d. h., cartelization or price fixing are excluded,
  3. flexible customization, d. This means that both suppliers and consumers must be able to react immediately to price fluctuations within the space-time continuum in which they interact; the goods must be mobile.
  4. Homogeneity , d. i.e. personal preferences are left out; that implies rationally acting consumers (disregarding psychological factors such as brand awareness)
  5. factual similarity of the goods, d. This means that every commodity is literally interchangeable (substitutable).

These premises of a perfect market are rarely fulfilled. However, (neo-) classical economists generally do not infer the weakness of their model from this; Rather, they consider this fact to be a mistake in Realpolitik: They do not want to adapt the pure model to the imperfect markets (accommodation), but instead make the markets more perfect (e.g. switch off political interventions), which they consider to be a prerequisite for optimally satisfying the needs of both providers and consumers hold equally (assimilation).

This is where the criticism of the microeconomic market model comes in. The following points are cited to highlight the dangers of an entirely free market economy :

  • Social blindness: The market mechanism described only knows the affluent demand. A given market equilibrium implies an optimal supply - however, e.g. For example, there may be undersupply in relation to individual categories of needs, which in extreme cases is expressed in hunger and homelessness .
  • Externalization of economic costs: In pricing, the provider's production costs are only taken into account - if at all - insofar as they are microeconomic costs; social or ecological damage from economic activity is passed on to society.
  • Uncoordinated market dynamics : The respective development trend of the market is determined solely from the status quo , i. In other words, all decisions can practically only be made after the fact, which leads to imbalances at the sectoral and spatial level.
  • Price-performance ratio : Offer and price do not always correlate: the provider is often dependent on a certain income, so that if prices fall, he has to increase his offer.

From a microeconomic point of view, it makes sense to divide the housing market into sub-markets , such as the market for rental apartments and the market for owner-occupied apartments . While the market price represents the rent for the former , the market value is the price for the latter .

The filtering concept

The filtering concept deals with the problem of the heterogeneity of the housing market by assuming seepage effects between initially qualitatively different market segments (see figure). Based on a correspondence of personal income distribution and distribution of housing quality (t 1 ), the following assumptions are made:

  • The quality of an apartment corresponds to the phase within its life cycle , i.e. i.e., it decreases over time (t 2 ).
  • The rental price of the apartment decreases in line with its quality.
  • If the quality of an apartment falls below a minimum standard, the property will be demolished or replaced (t 3 ).
  • New living space is generally created in the upper price segment of the housing market with maximum quality.
  • The residents behave economically rational and are mobile.

If the income distribution is assumed to be constant, there is now a continuous filtering-down of the apartments, to which the residents adapt by moving regularly to newer apartments. There are characteristic moving chains. As an extension of the model, the option of modernizing an apartment is introduced, which is then referred to as filtering-up.

The filtering concept describes a steady state for a heterogeneous market, and thus represents a modification of the microeconomic market model. Despite its weaknesses (including the implied assumption of a structural oversupply), it repeatedly serves as an argument for a government housing promotion policy, the primarily middle one and higher income groups ( home owner allowance ).

The question of the usefulness of this model for political practice is of considerable importance when discussing the need for fixed rental prices .

On the other hand, empirical studies call the model into question. Ipsen, Glasauer and Lasch (1986) therefore present the following counter-concept, which is based on several studies:

The concept of the segmented housing market

Empirical studies show that the assumption of a correlation between housing quality and rent level cannot generally be maintained. Rather, the result is a U-shaped distribution curve : both poorly equipped and well-equipped apartments have the highest rent per square meter (Ipsen / Glasauer / Lasch 1986: 20). This phenomenon can be explained by the fact that the housing market is not a purely economic matter, but is socially transformed. The price as a function of competition in the field of tension between supply and demand can only prevail in anonymous situations. In addition to purely economic factors, there is now the social relationship between landlord and tenant. The length of stay parameter, which is of interest in this context, now leads to a geographical differentiation between mobile and immobile quarters within the city, which are referred to as “spaces with different exchange rules” (Ipsen & al).

Such a market segmentation into relatively closed sub-markets means that better quality quarters can have lower rents. However, the lowest income brackets are excluded from these sub-markets. The barriers are to a large extent in non-economic areas: communicative elements such as information flows, the influence of social gatekeepers (→ managerialism ), situational backgrounds of the move, etc. play an often neglected role in urban segregation .

However, such social factors only override conventional economic conditions such as income and occupational group, which undoubtedly determine the respective market opportunity. Friedrichs (1995: 59) distinguishes between the following housing market segments:

  • Social housing
  • inexpensive privately financed apartments,
  • "Normal" rental apartments
  • Condominiums
  • Homes

Critique of the pure economy: living space as a social space

The housing market is an imperfect market. This is not simply due to existing state regulations, which one would simply have to abolish, but to the specific character of the apartment as a "commodity".

Max Weber already pointed out that the market, as the center of modern capitalist society, is not only an economic, but also a social space (see Urban Managerialism ).

The necessity and starting points of political intervention in the area of ​​housing production become even clearer and more concrete if this is analyzed from a socio-economic point of view:

The housing market in the field of tension of housing production

The housing market is often characterized as an “existing market”, since the annual new entry - measured against the total housing stock - hardly accounts for more than 2% (cf. Jenkis ). This purely statistical fact can lead one to underestimate the importance of housing production :

  • The theoretical consideration of the building owner's initially purely economic decision-making process, with special consideration of the allocation process, can provide explanations for the spatial pattern of the built (residential) environment.
  • A dynamization of the allocation process leads to the background of the reproduction of spatial structures, not only because the given often shapes the new; Rather, the given land use must permanently prove itself with increasing competition between alternative types of use. Once decisions about location have been made, they can be revised, apartments can be demolished or their function can be converted (e.g. for commercial purposes). In this respect, new construction does not automatically mean an increase in the housing stock.
  • Types of housing production have long-term effects on the housing market with its structurally pre-defined spatial structure . In addition to the basic longevity of an apartment , the calculation of the construction costs already implies the approximate course of the rent determination .
  • For the same reason, housing production is also an important point of attack for a forward-looking housing policy.

literature

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