Homes-uP — Single-Family Homes under Pressure?

Homes-uP — Single-Family Homes under Pressure?


Subproject IOER

The aim of the IOER subproject on single-family homes (SFH) is to investigate how demographic change and new forms of living have affected the functional and constructive characteristics as well as the spatial distribution of the national stock of SFHs. The national Census undertaken in 2011 indicated a stock of approx. 12 million SFHs. This stock is highly heterogeneous in regard to building materials and forms of construction. As a constituent element of the residential housing sector, SFHs are embedded in the institutional framework of the welfare state, which has undergone several transformations in the course of the 20th century. Previous analyses have scarcely investigated the heterogeneous nature of the stock of SFHs and its institutional underpinnings. Similarly, there has been only limited study and classification of the characteristic features of settlement structures.

The IOER Project is subdivided into several phases:
Analysis and classification of Germany’s stock of SFHs in the 20th century (regarding building type and settlement structure) against the background of demographic change;

  • Determination and assessment of specific problems;
  • Modelling of impact on resources (land, materials, energy) of diverse types of building and settlement;
  • Case studies of various SFH-settlement types;
  • Development and discussion of diverse scenarios;
  • Recommendations for action and development of a strategic vision.

Subproject ifo Dresden

The ifo institute examines the impact of demographic change on supply and demand in the market for single family homes. Rural areas with a large share of single family homes have to adapt to a shrinking population. There are hardly any price adjustments as a response to the lower demand and as a result many houses are vacant. There is also reason to believe that public intervention may distort prices in the real estate market. This subproject aims to address three issues:

  • the impact of sparse population on the cost of infrastructure provision,
  • the importance of psychological factors to the determination of prices in real estate markets,
  • the impact of transaction taxes on the number of transactions and prices of single family homes.

We approach these issues empirically with data on German municipalities with different population densities, with the help of theoretical framework under behavioral economic assumptions and in an empirical investigation of real estate transactions in German states with different property transfer taxes. The subproject aims to clarify how prices adjust in the real estate market. This knowledge may serve policy makers as a basis for meeting the challenges of demographic change.

Subproject ILS

Communities are facing new challenges regarding single family home neighborhoods affected by a (potential) population decrease. Until now these neighborhoods were considered a segment whose development would be entirely regulated by the market. Correspondingly, the instruments developed to deal with shrinking processes are adapted to neighborhoods which were or still are characterized by a long lasting urgent need for intervention (i.e. multilevel apartment buildings). But shrinking processes will also become a day to day issue for municipalities when dealing with single family home neighborhoods. In order to do this successfully, local authorities require indicators identifying a need for intervention before a trading-down effect sets in.
This research is based on already existing sets of indicators (Wüstenrot study 2012) in which different supply and demand indicators for different phases of post-war construction are overlaid. The objective is to deduct which neighborhoods in West Germany will likely be influenced by a possible critical development.
This analysis focusses on central issues such as limit values for a sustainable development, problem awareness on the side of the municipalities as well as the prospects of success regarding different courses of action in dealing with the shrinking process.
In order to answer these questions, the first step is to identify risk indicators (pressures). In cooperation with the 'Deutscher Städte- und Gemeindebund' und 'Deutscher Städtetag' (associations of German municipalities) the ILS will conduct a survey of municipalities (standardized questionnaire). The questionnaire is regarding measures which have already been applied in order to deal with a decreasing population as well as the suitability of applying these measures to single family home neighborhoods. Additionally, in-depth guided interviews as well as case studies providing a more detailed analysis will be conducted in order to verify the findings of the quantitative research.

As a result different sets of indicators will be developed whose interdependencies will be described and represented statistically. Embedding the indicators in different scenarios tailored options for municipal intervention will be created. The main objective is to set the foundations for a monitoring system to assess a (potentially) negative development of built-up single-family housing neighborhoods.

Sub-project ISOE

ISOE sub-project is empirically investigating the effects of demographic and societal developments on acceptancy and attractiveness of living in a single-family home. For example, the project team is analyzing how the differentiation of lifestyles, the change of gender relations, increasing professional expectations of mobility and continuing immigration are affecting societal housing models and residential needs. Here, an important question is, whether in addition to the traditional user groups, new user groups as for example joint residential initiatives can be identified for living in single-family homes. Up to now, no systematic findings on this topic for the area of single-family homes are available.

Based on literature research regarding the change of housing models and residential needs, an explorative study will be carried out. Members of old and new user groups of single-family homes will be questioned with the help of qualitative in-depth interviews. The results will be summarized in a typology that will reflect the types of housing and residential needs of the different user groups.

The findings on the symbolically and socio-structurally conveyed perception and use of single-family homes and SFH-residential quarters provide important information concerning the demands of current and potential user groups. This knowledge is to be embedded into scenarios in order to present possible paths of development for single-family home districts. Furthermore, recommendations for actions for decision makers and planners shall be derived so that the challenges of the demographic change for single-family homes can be recognized in time and target-group specific measures can be developed.

Sub-project ZEW

For most Germans, buying a home is the biggest single purchase of their lives. Just under a third of all households in Germany own a single-family home (SFH), which makes this form of housing an important contributor to wealth accumulation in the private sector. At the same time, in the context of demographic change, regional divergence in the number of vacant homes, financial housing affordability, and SFH price developments are expected to deepen further due to a decrease in population in shrinking regions on the one hand and a continuing influx of people in growing regions on the other. Against the backdrop of market imperfections, the question arises whether SFH markets can be seen as “efficient“, or whether public intervention is necessary in order to face up to this array of challenges. Taking these questions into account, the ZEW researchers’ efforts in the context of the project shall yield evidence-based recommendations to action for economic policy makers.
To answer the overarching research questions, project work carried out by the ZEW will initiate at different geographic layers. Concerning the individual property level, it can be assumed that the number of empty homes in a region indirectly and adversely impacts on the sales values of other SFH in the same market. Such “negative externalities” could encourage policy measures targeted at reducing the overall number of vacancies. At a higher level of aggregation, long-term developments of SFH marketability in regional housing markets will be analysed. The expected SFH marketability can be evaluated, for example, by the vacancy rate of similar homes, akin to matching models in labour market economics. A focus of the analysis here shall be on the persistency in regional SFH market imbalances over time: if increases in the number of vacant homes over time are generally explained by past levels of vacancies, this may call for adaptive measures of restoring housing market equilibrium. Finally, in the context of “financing conditions of SFH transactions”, current management practices of SFH asset price risks shall be identified based on individual mortgage offers from real estate financing banks and be evaluated against normative guidelines.