Affordable Urban Development - Research Paper Example

Contents Introduction 0 Difficulties of supplying general and affordable housing in urban areas 5 The consequences of housing undersupply for the urban areas 7 Future solutions to solve the problem 9 Conclusion 11 Bibliography 13 Introduction The affordability of housing, and the supply of housing, is now being considered as important part of determining the vitality and sustainability of many urban areas. They are also significant ways to enhance the diversity and promote the social inclusion within urban areas. However, the problem that exists within the current era is the fact that there are fewer and fewer affordable homes available, or being constructed, within these urban areas. The past several decades has noted a significant shift in terms of the way in which affordable housing is provided within urban areas. As a function of chronicling this evolution and change, the following discussion will attempt to consider the relevant social trends and dynamics that have prompted differences in the way that planners and stakeholders engage with urban development and the provision of affordable housing. Likewise, consideration for the future will be discussed and relevant/pertinent changes that are likely to increase supply and reduce cost will effectively be considered. Background: In terms of the past, it was generally understood that the provision of housing to individuals that could not afford it should not be focused on urban areas; as these areas ultimately held the highest potential for economic growth and development. Naturally, this is somewhat of an elitist perspective and one that does not promote economic equality and parity to any level or extent. In many cases, urban development was structured in such a way that only the very worst areas within the urban setting or those that were the most removed from any potential for economic development were those which were focused on in a developmental nature. However, as time is changing more liberal ideas came to modernize the approach to urban development and housing affordability issues, the need to provide realistic housing opportunities to individuals that were lower income within close geographic proximity to available economic opportunities was something that came to be placed a higher and higher premium. Yet, in tandem with this approach, and even further level of evolution and development take place. Essentially, individuals that were encouraged with the prospects of urban renewal and the provision of affordable housing to individuals of low income within these areas soon came to realize that the ultimate potential for continual expansion and development of affordable housing within this particular geographic space was limited. As cities began to grow and develop a rapid pace, in the postindustrial era, the overall availability of existing land, whether economically pressed, within the urban area was distinctly limited. This provoked a tertiary response that will be analyzed and discussed within some depth further within the analysis. Within this particular approach, stakeholders realized that the provision of affordable housing within the urban area was essentially predicated on the benefit of reviving these areas and the same time providing potential economic opportunities for those that would come to live in these spaces. However, as the overall amount of urban areas began to dry up within major cities around the nation, the ability to continue to provide affordable urban housing, by the government, and leverage this to benefit the workforce within these urban regions was essentially lessened. As such, a new focus, and one that has been prominent over the past several years, has been engaged; one that sees urban housing as a slowly decaying possibility and one that instead seeks to develop rural affordable housing that in tandem with robust transportation systems still seeks to fulfill the basic needs elicited above. Current Exhibition of Issue: This is seemingly true regardless of the fact that the overall quality of life in the urban areas of the nation is commensurate with the quality of life within the cities. Studies by a litany of researchers, including Meek (2014) and White (2013) have measured the quality of life, proliferation of services, and overall differentials that exist within urban areas of the United States as compared to more rural areas; noting that although differentials exist, the size of the disparity of metrics measured is not a valid indication that the urban areas lack in amenities or infrastructure. As for the middle class in the US, the housing in urban area seems less affordable as compared to previous times in the not so distant past. Similarly, scholarship by Morris (2011) indicated that the life experience of individuals residing in urban areas is generally positive; as compared to that of rural dwellers. The issue at hand is with relation to the fact that inefficiency of use and extremely high demand has created unique market conditions for urban properties and housing within the United States (Shapely, 2011). The socio-economic difficulty that is in turn represented is contingent upon the fact that individuals within urban areas do not generally have the financial resources that individuals within more rural areas can draw upon. In tandem with this difficulty, increasing demand for properties within urban areas, places individuals that seek to leverage housing within this market at a distinct disadvantage; as supply and demand are meeting at an equilibrium outside of the reach of many stakeholders within society. Jones & Coombes (2013) indicate that this hardship is one that has placed undue pressure on the US real estate market and one that threatens to reduce the equity of real estate and decrease the upward mobility and life choices that individuals seeking to promote their own interests might otherwise expect to achieve within their lifetime. Figure 1 Net migration within US, 2000/01–2002/03 (thousands) (Source CRC 2005) As shown in the figure 1, the net migration is positive for urban areas and mixed areas and it is negative for the rural areas. And according to the ONS estimated, the people moved from the urban areas to urban areas are tend to be elder and the rich. And on the other side, the people moved from urban areas to rural areas are tend to be young and poor people. This indicates most people prefer to live in the urban areas from another perspective (Gallent & Robinson, 2012). So providing enough affordable housing in urban area can be of great importance for social stability and development of local economics. (Richard, 2006) Difficulties of supplying general and affordable housing in urban areas One of the first and most prominent difficulties of supplying affordable housing in urban areas is contingent upon issues of overall demand and the way in which existing and available government funding are distributed. For instance, Gilligan (2013) indicated that government funding is almost entirely leveraged towards providing affordable housing within heavily populated regions of the country; as this is obviously where the greater demand exists. As a function of satisfying the largest number of stakeholders with limited resources, the government of course opts to engage affordable housing solutions within densely populated areas first. It is not easy to solve due to these difficulties of supplying general and affordable housing in urban areas which are listed below: 1. High price Due to the relatively weak national macro-control for the affordable housing, the price of the house is mainly decided by the supply-demand market. Because the demand exceeds supply for the houses in the urban area, the price cannot be reduced. Furthermore, although the price of the house is rising, there are still some high-income classes are able to buy these houses, from the other side they sustained the high price of the house in urban area. Therefore, it can be one of the difficulties for supplying houses in urban area. 2. The growing urban population With the rise of the living standard and the development of the local economics, an increasing number of people prefer to live in the urban area because of the better living environment and the diverse of life style. It is kind of “de-urbanization”. This trend lead more and more people move to the urban area, but the growth rate of the affordable housing in the urban area is relatively slow, therefore the number of affordable housing cannot meet the need in the urban area. As the urban population continues to grow, the reduction of the supplying of housing is becoming more and more serious. 3. Limited land in urban areas The land in the urban areas is ultimately limited; as such, it restricts the overall number of the affordable houses. In addition, in the planning process, most of the land in the urban area is planning to be used for the agriculture and animal husbandry, and the land for the human settlement is relatively less. Therefore the shortage of the land for living is also one of the important reason cause the reduction of the affordable housing. (Richard, 2006) The consequences of housing undersupply for the urban areas The ultimate consequence of the issues that have thus far been elaborated on are contingent upon the unique dynamic of increasing demand as increasing price and decreasing demand is evident within the market. Although this is easily explained from an economic perspective, the underlying consequence of an undersupply of housing within urban markets has a profound impact upon the way in which society integrates and what decisions individuals will make within the coming years (Hamiduddin & Gallent,, 2012). For instance, as many individuals of working age within rural areas dream of retirement and leisure within a more laid back setting, two alternatives are available. Either they can seek to compete for housing within an increasingly expensive and restricted urban market; or they can look outside the US for their retirement. The consequence of the former is frustrating; however, the consequence of the later is devastating to the overall outlook of growth and development within the economy of the United States (Gallent, 2008). The ancillary reason for this is of course the fact that more and more individuals will give up on seeking housing within the urban communities, regardless of its benefits or how much they may wish to live there; due to the fact that it is simply unaffordable and generally represents an impossibility. As housing undersupply is exhibited on a more and more systemic level, common rules of economics dictate the price can only rise; therebe worsening the situation and decreasing the utility for all stakeholders involved (Gallent, 2009). Figure 3 below illustrates the increase in pricing that has taken place over the past few years. It is essential to note that although increasing prices are expected within any market over time, the rate of change that is exhibited within the United States, in terms of real estate in urban areas, has grown disproportionately with average changes in salary and/or average changes in the inflation rate or cost of living. Figure 2 Real house prices in selected regions 1969-2002 As mentioned above, due to most people give priority to live in the urban area, the prices of the houses in urban area increased faster than that in the rural area and there are fewer affordable housing units within the urban area. Therefore, the problem seems more serious in the urban area. As the housing price rises and the reduction of the affordable housing in the urban area, some more effect have been caused. For the people living in the urban area, the quality of their lives was reduced because they have a higher housing cost than before. For a plenty number of middle classes, they have few choice to choose where they want to live (Furbey et al., 2001). And this may cause longer commuting distance and reduced labor mobility. Moreover, as the housing price rise, a fraction of people cannot able to buy or rent a house, therefore the homelessness will be increased. As a result, it will exacerbate the social instability. In addition, the family structures and friendship networks were damaged towards some people. Finally high prices will aggravate the gap between rich and poor vulnerable to social instability and it is also a risk to economic stability and overall economic welfare. (Bramley, 2007) According to the Baker’s Report, the consequence of housing undersupplying in the urban area can be mainly concluded below: constraining economic growth, worsening affordability and greater risk of macroeconomic instability (Bevan et al., 2010). Future solutions to solve the problem The following serves as a preliminary and brief listing of some of the most salient potential solutions that the government of the United States might engage in as a means of lessening the runaway pricing and high demand that exists within the current market for urban homes. 1. Reusing empty buildings In terms of the potential for this approach to work, it must be noted that it does exhibit core shortcomings. Firstly, re-using empty buildings will still require heavy initial investment to bring them up to health and safety standards that are adequate for housing. Likewise, by filling up existing space, the potential to allow the real estate market to develop at its own pace and prosper new areas economically is inherently reduced. 2. Repurchasing ‘Right-to-Buy’ properties This approach bears perhaps the greatest potential. However, it also falls short in that it would require the government to play an even more active role in drying up existing supply and then replacing this supply on the market at a reduced cost; thus creating a profound institutional dead-weight loss for all of society and the tax base. 3. Re-negotiating under-occupation (Commission for Urban Communities 2005) Re-negotiation of under occupation properties could be beneficial as well; yet again, the utility of individuals that might be impacted by this could necessarily be harmed. As has been illustrated previously within the analysis, the focus of the United States’s urban housing market has invariably been one house for one individual. 4. Redefining PRS leasing Redefining PRS leasing is another valuable option that has a high degree of potential to change the ultimate landscape that has thus far been defined. However, as with the other alternatives that have been denoted, this approach also increases the presence of the central government in the market with respect to setting new standards with regard to lease pricing; a tactic that has not yet proven to be efficient or highly effective within the more populated areas. 5. Increasing the retention of affordable houses (Richard, 2006) Likely the very best approach is to increase the overall retention of affordable housing. This is a way in which the United States can attempt to tackle the issue from the supply side while reducing the overall cost to the consumer and maximizing the overall number of options that they have available to choose from. Whereas this is a very expensive endeavor, it is likely that such an approach could at least partially ameliorate the current pressures that are felt with respect to the lack of supply and very high demand for homes within urban areas of the US. Conclusion The essay has effectively discussed the difficulties of supplying general and affordable housing in urban areas. There are totally three main difficulties that cause the housing problem. The first one is the high price of the urban housing due to the imbalance relationship between the demand and supply. The second one is the growing urban population. Finally, the growing speed of urban development is much faster than the growing rate of affordable housing in urban areas; so demand always exceeds the supply. Finally, the reader can understand that core and impactful consequences to this undersupply have been painfully represented in the current economics and developmental level of the United State’s real estate market. In order for this to be changed, direct engagement on the part of the government will need to be effected. Bibliography Commission for Urban Communities (2005) The State of the Countryside 2005. Bramley, G. (2007). Increasing Affordable Housing Supply. Dublin: Affordable Homes Partnership. Richard, B. (2006). Homes for urban communities. The Homestead: Joseph Rowntree Foundation. Susilawati, C. (2004). AFFORDABLE HOUSING: WHO SUPPLY IT? Brisbane: Armitage, L. Woo, Y 2014, Two Tails of Housing-led Urban Regeneration Policy Network: The UK and South Korea, International Planning Studies, 19, 1, pp. 77-98, Academic Search Complete, EBSCOhost, viewed 3 November 2014. Interview: The following interview was conducted with XYZ located at the XYZ Housing and Urban Development Office: Questions: Do you feel as if the focus on urban housing has changed during your tenure at HUD? If so, what changes are most notable? The respondent indicated that she felt it has changed considerably over the past several years; even during her tenure at the agency (approximately 18 years). One of the changes that she indicated was that there has been a decreased emphasis on urban housing and an increased emphasis on more rural housing opportunities. Where do you see housing and urban development of affordable housing options going in the near future? The respondent indicated that housing and urban development should seek out ways to provide more affordable urban projects and begin to shift away from the recent focus that it had placed on development of more rural housing options; as these are not able to assist in developing the ability of individuals to find jobs and/or engage with the economic base. Has the government’s approach to the issue changed and shifted over the years? The respondent indicated that the government’s interest in developing the economy as an indirect product of HUD has commensurately decreased over her tenure at the department. As such, she also noted that the desire to build more affordable housing was taking a primary position as compared to providing quality opportunities for disenfranchised members of society that are ultimately in need of opportunities rather than merely a place to stay and live off the largess of the government. Is the approach that is currently being taken correct or would a change of course be in order? As the respondent indicated in the other questions, she also noted that the current approach is not effective and will ultimately bankrupt the HUD budget without providing any commensurate level of economic relief. Is the current vision of HUD fulfilling its vision and the needs of the communities it serves? Likewise, the respondent was of the opinion that even though the more rural housing development focus of the past several years was better than nothing, it was not in keeping with the mission, vision, and goals of the HUD department and would be viewed as a failure in coming years unless the situation was quickly changed. What prospective changes would you recommend in order to fix the situation and provide better resources and opportunities to the target groups that HUD seeks to impact? Placing a focus on developing new approaches to urban areas, integrating affordable urban housing in sectors that have the economic base and potential to provide jobs and developing new architectural approaches to make use of diminished real estate are all suggestions that the respondent indicated would be beneficial in correcting the current path that HUD was on. Read More