Shrinking housing market, long-term vacancy, and withdrawal from housing market
- PDF / 917,778 Bytes
- 20 Pages / 439.37 x 666.142 pts Page_size
- 5 Downloads / 251 Views
Shrinking housing market, long‑term vacancy, and withdrawal from housing market Masatomo Suzuki1 · Yasushi Asami2 Received: 2 November 2019 / Accepted: 20 April 2020 © The Japan Section of the Regional Science Association International 2020
Abstract Although a substantial number of houses in shrinking societies face long-term vacancy and ownership abandonment, previous literature on housing market structures has independently modelled illiquid status due to temporary decline in demand, implicitly assuming that all potential sellers try to sell in the market. This paper proposes a unified framework for the process of housing market shrinkage, in which long-term vacancy is followed by market withdrawal. Our simple model of a distressed housing market indicates that the market can seem “liquid” even though the demand is actually small: only forced sellers who need to dispose of their properties quickly will try to sell at low prices; whereas, the buyer–seller ratio in the market becomes sizable in equilibrium. This implies a need to capture the degree of sellers’ exits to understand the microstructure of remaining housing markets. Keywords Vacant housing · Housing abandonment · Housing market · Shrinking society · Conceptual framework JEL Classification · R21 · R31
1 Introduction Although the world’s population is currently growing, some parts of East Asia, Europe and the United States (US) are facing population shrinkages. Two reasons are interregional migration from cities/regions, transforming their industrial * Masatomo Suzuki [email protected]‑tokyo.ac.jp Yasushi Asami [email protected]‑tokyo.ac.jp 1
Center for Spatial Information Science, The University of Tokyo, 5‑1‑5, Kashiwanoha, Kashiwa‑shi, Chiba 277‑8568, Japan
2
Department of Urban Engineering, The University of Tokyo, 7‑3‑1, Hongo, Bunkyo‑ku, Tokyo 113‑8656, Japan
13
Vol.:(0123456789)
Asia-Pacific Journal of Regional Science
structures and/or political systems (Haase et al. 2016; Wiechmann and Pallagst 2012), and the “structural” problem of the fertility rate being reduced by urbanization (Sato and Yamamoto 2005). Given that urbanization represents a growing phenomenon globally, in the future, countries/regions are increasingly expected to face nationwide population shrinkages (United Nations 2017). This means that the shrinking society issue will constitute a worldwide phenomenon in the near future. In shrinking societies like Japan, where the nationwide population has already started to shrink (e.g., Hirayama and Izuhara 2018),1 the housing supply does not adjust proportionally to the shrinking demand, due to houses’ “durability” (Glaeser and Gyourko 2005). The excess supply of houses causes some to become vacant in the long term and ultimately to be withdrawn from the market. Indeed, Fig. 1 shows the vacancy rate and the withdrawal rate of housing stock in Japan. First, the “vacancy rate” is the ratio of the number of “vacant properties” (i.e., properties currently without any residents) to the number of “all the existing properties” (i.e.
Data Loading...
