Homes-uP — Single-Family Homes under Pressure?

Homes-uP — Single-Family Homes under Pressure?

Scenarios, approaches to action, and instruments

The long-term perspective pursued by the project involves considerable uncertainties regarding the development of economic, socio-cultural and political parameters and framework conditions which affect the development of the housing market. With the scenario technique, development corridors can be sketched despite relatively great uncertainty regarding future framework conditions. Scenarios (what-if analyses) provide information about possible futures, and permit a description of effect contexts and their communication (Neumann 2005). In workshops with stakeholders and experts (administrators, construction financers, planners, etc.), exploratory scenarios are developed in which, e.g., the effects of changed types of demand or policy framework conditions can be played through, and possible effects on the future of SFH stocks investigated.

Based on the result of Work Package 2, quantitative, regionally differentiated scenarios for future home price developments will be derived by combining estimates of the population elasticity of housing prices with demographic projections. As reliable time series on German SFH prices are generally limited, it may be necessary to identify representative cities for subsets of adequate location types in the course of this working step (e.g., rural and metropolitan housing markets).

After the selection of various types of municipalities, a discussion of municipal options for action has to take place. The qualification and adaptation of SFH stocks for which the marketability is not secure is a municipal field of action for which as yet little experience or well-practised regulatory systems are available. Above all, uncertainty exists as to whether this is a public interest issue or whether only the individual interests of homeowners are affected: Decision-makers lack the reliable indicators needed to substantiate the necessity for local authority intervention. (Berndgen-Kaiser et al, 2014). With the aid of case study analyses, reliable indicators can be developed to indicate the necessity for action at the municipal level. In the context of detailed examination, there has to be a continuous discussion of policies and measures on various approaches to municipal action, such as planning and regulating, provision of facilities, monitoring and consulting, initiating, promoting and facilitating of debate, with the intensive participation of municipal planning experts, and based on quantitative surveys of local planning actors (Wüstenrot Stiftung 2012).

This discussion on municipal options for action is to be enriched by an orientation toward new approaches to action and the new instruments in the international context. For example the recent housing crises in various advanced economies, which in some cases originated in complex product innovations in housing finance, is gradually inducing the evolution of new financial instruments and ownership structures in single-family housing markets. As part of the international cooperative effort, the motivations, economic concepts, and the main opportunities and threats of these trends are to be investigated and illustrated comparatively for a qualified set of countries. For this purpose, the project partners will rely on international networks and multipliers (ReCapNet, ENHR, ERES) and arrange structured interviews with national and international experts of the real estate and housing finance industries. Insights from these interviews will be combined with literature and secondary data analysis to establish an overview of the existence, concrete purpose and country-specific institutional design of novel financial instruments and ownership concepts aimed at resolving current and expected future deficiencies in the market for single-family housing (e.g., reverse mortgages, housing options and derivatives, single-family home REITs).

All in all, WP 3 is to condense the results of the previous work packages into possible development scenarios, as a basis for a broader informed societal discussion. Moreover, the necessity for governmental interventions in cases of market deficiencies, as well as options for action for municipalities and private actors, will be discussed.