Urban Economics for the Developing World - Research Paper Example

 Urban Economics for the Developing World Introduction In economic terms, public housing can be considered as a market. Theoretically, market enhances efficiency in allocation using the complex process that links supply and demand. Public housing is the housing tenure system where the government authority owns the property. This is established in order to provide for a safe and decent housing for the low income families, the disabled and the elderly. The public housing can be of any type and size; from single houses to the apartment complexes. In most cases, the housing authority manages the housing by charging affordable rental rates to the eligible residents. Pursuant to the program requirements, the residents will typically pay rent at almost 30% of annual adjusted income. The provisions for the utility allowances are d1one by the tenants. The rules and regulations of public housing are outlined in the occupancy policy (Balchin, David and Jean 2000, p.16).1 Public housing may be restricted to families and individuals with low income levels and the submerged middle class, which may be temporarily out of labor market in case of a depression. The housing authority approves the eligibility based on the annual gross income, the age and disability, the citizenship or immigration status. After the approval of eligibility, the housing authority examines the credit, criminal and rental history. Withdrawal of admission is done upon dissatisfaction of the applicant’s behavior by the housing authority. The authority sets income limits for the metropolitan or county area where the housing project has been located (Balchin, David and Jean 2000, p.18).1 Public housing is critical in handling the inner-city isolation and poverty. Proper housing is necessary for human life and is an improvement to life chances among the slum residents. Therefore, public housing is considered as a state’s responsibility in ensuring that the citizens have affordable, and decent housing (Cisneros and Lora 2009, p.24).2 Traditionally, poor housing has as an association with high mortality and crime rates. These problems have endangered the lives of the residents and lead to the psychological afflictions because of epidemics due to overcrowding and other unsanitary conditions. Public housing projects have played a significant 2role in ensuring better housing. This is done through the establishment of low-income housing that can be sustainable. These are intrinsically better when compared to the traditional ones. The designs are sustainable, and they incorporate water conserving and energy efficient technologies in appliances for the buildings. Furthermore, governments have played a crucial role in formulating acts that offer protection against recurring unemployment and outline the remedies for unsanitary and unsafe housing (Cisneros and Lora 2009, p.25).2 Problems with Public Housing. The problems affecting the public housing are considered to be basic and involve the economic development in an area. Development problems. The key developmental constraints in public housing include high populations in urban centers, environmental degradation, natural disasters and low economic power. These affect the public housing either directly or indirectly. Many countries suffer from crushing debt-service, the shrinking foreign investments, high interest rates, and unfavorable terms of trade. This leads to the decline of commodity prices within the world market (Garb 2003, p. 1421).3 The increase in population within the urban centers leads to reduced housing space. The increased population demands an increase in infrastructural and housing facilities. Some natural disasters like floods and earthquakes destroy the existing housing stock. As a result of the invariability, there will be overstretching of the meager resources. The housing constraints can be outlined as increased urbanization and population growth, insufficient housing finance, the land tenure and the costs, expensive and inadequate building materials, low purchasing power of the prospective buyers, and low housing priority by the construction sector (Garb 2003, p. 1423).3 The overriding factors affecting the public housing include the availability of finances, cost of the building materials and the land tenure. Many countries have never prioritized the production of the building materials for public housing in their plan of action. The public housing has been violated. The original3objectives ignored include the increase of self reliance, effectiveness in the mobilization of the human resources, creation of the industrial base and satisfaction of the basic needs of the citizen, and national development of building materials. The other objective is the construction sector encouraging involvement of women during housing construction (Garb 2003, p. 1426).3 Local Building materials. Consumption of local building materials for many countries in is not easy. Often, supply is insufficient to meet demand for the materials. Many countries require stimulation of the building materials like stabilized soil and lime. In many countries, use of lime is at the early development stages, and the little available is enormously charged. Therefore, most of the houses have been developed using local building materials because of the cost advantage over other materials that are popularly used. Furthermore, the skills involved in building and construction may be unavailable in some countries. Therefore, laying costs tend to be high when compared with local methods (Glaeser and Joseph 2008, p.36).4 Cost of building materials. Building materials compose the single largest input requirement in any housing construction. The supply of some of the popular building materials in many countries is insufficient and expensive. Moreover, the local materials that are available are cheap and of low quality. The research in building materials is not fully developed to marketable level. This results to deplorable conditions in shelters and unavailability of basic shelters. This has facilitated unfavorable4 patterns in general growth of the population, as well as high migration rates to urban areas. This has resulted to stagnation of the government efforts in improving the situation (Griffiths and Tita 2009, p. 474).5 The sector of building materials suffers from high dependence on imports. The opportunities to exploit indigenous systems of production of the materials are marginally exploited. Many countries are lagging behind in their efforts towards the promotion of the building materials, especially those based on the indigenous factor inputs. As a result, the local resources are inadequate due to inadequate strategies for development and expansion of the sector of local building materials. Building materials are believed to contribute greatly to the national economic recovery. Nevertheless, the scarce resources have been drained on importing the building materials. The full exploitation for the raw materials is inaccessible because of different constraints; these constrains include unavailability of data on the characteristics of materials and the financial constraints towards the exploitation of the raw materials (Griffiths and Tita 2009, p. 477).6 Many countries have sufficient raw material reserves, but full exploitation tends to be limited due to unavailability5 of sufficient data on properties of raw materials and the financial barriers. The necessary technologies lack full implementation and expertise in carrying out of the activities towards development of building materials is insufficient (Jacob 2004, p. 233).7 Factors limiting use of local building materials. Technical factors. Use of local building materials is associated with technical problems that affect the acceptance degree in the housing sector (Jacob 2004, p. 235).7 The high water absorbent rates reduce the strength of these materials, hence deterioration of the resulting building. Other materials like wood are highly susceptible to termite attack; bio-degeneration tendencies can be easily affected by fires. Economic factors. Many families with insufficient economic capacity result to self-help housing. High sacrifices in finances involved and the tenant caters for all the risks. The quality, construction rate and availability of amenities act as determinants of the financial capabilities (Galeser & Joseph 2008, p.62).8 Institutional factors.6 The codes of practice and specification standards in many countries discourage use of the local materials like earth in housing construction within the urban areas. However, the housing standards tend to be higher than those obtained when there is the use of some local materials. Funding of public housing. Under-funding in public housing sector results to selling of the housing stock by the authority. The inadequate funds may be as a result of government supporting private rentals. They switch the funds allocated for public housing to households with low incomes and offer subsidies to those buying houses for the first time; this has benefited those with high income (Galeser & Joseph 2008, p.64). Most states lag behind in addressing the problem of limited funding due to the increased pressure in funding for spending in health and education. The state governments have reluctance in providing the resources that can address the short fall of the expenditure. The sale of the public housing stock by housing authorities with the aim of reducing the operational deficits results to underinvestment in public housing. The physical conditions for the public housing stocks deteriorate, and mostly supply will be lower than the demand. Most public houses are thus located far from the urban areas and city centers because of the limited funds. Since public housing targets the low-income residents, the disabled and the elderly, individuals eligible for the public housing surpass the available housing units. As a result, waiting list contains a considerable number of individuals who have to wait for long periods before they secure a housing unit (Ludwig, Duncan & Hirschfield 2001, p.655).9 The large 7number of public housing authorities hinders the assessment of allocation of funds. In many countries, the mismanagement of the federal funds has been rampant. The accountability office tends to overlook the review process by giving attention to the efficiency of the overall program instead of funds’ allocation. The operating subsidies of the public housing act as key determinants of the difference between expenses in management and maintenance of development in public housing developments, as well as the rents paid by the residents with low income. These funds cater for utilities, repairs and maintenance. However, the subsidies never cater for security and coordination of services. Failure of the government in providing the adequate housing subsidies affects the residents (Ludwig, Duncan & Hirschfield 2001, p.657).9 Social residualization. Many people in public housing detest the fact that their tenant may live near them. Unfortunately, many people in such public housing suffer from low political priority, stigmatization of the public tenants, and rejection of public housing by the local government, and poor, false perception of illegibility of people living in public housing. People living in public housing lack 8pride of ownership. Often, residents resent having being the benefactors since the property is not rightly theirs. They rarely appreciate the value of the property with less regard to its maintenance. This is demonstrated through their actions when they do not take care of the property at all. Most of the public houses in many urban areas are old and unrepaired. Most of the public houses have not been renovated for years. The distressed properties have a high probability of having non-functional appliances that negatively affects the residents (Ludwig, Duncan & Hirschfield 2001, p.662).10 Many of the public housing is located in the urban centers that are prone to crime and drug abuse. Mostly, the location of the public houses owes its origin from political decisions disinterested in public housing and residents. Many families in public housing are low-income earners. Therefore, the private sector is incapable of serving the population in public housing. In addition, low-income residents are considered as vital determinants of the problems facing the public housing (Nechyba and Walsh 2004, p.178).11 Poor local policies and the illegal practices from the local government and housing authorities are the leading causes of poor public housing. However, the solution to poor policing includes the involvement of citizens in recreation and management of the public housing. Property Value. Many public housing complexes affect the value of the nearby real estates. However, there have been claims by the housing department of the public housing having no effects to the property value of the surrounding communities. The distress and aging of the public houses will affect the surrounding community differently. The property value for the surrounding community will be negatively affected (Griffiths and Tita 2009, p. 489).12 The historical problems affecting public housing. Traditionally, many public housing have been established in the heart of neighborhoods with a low-income population, and principally occupied by the ethnic and racial minorities. In many countries, this has 9enhanced racial segregation. If there are any efforts to outlaw the practice by the legislation of the national human rights, the government ignores such laws and neglects their duty in public housing (Garb 2003, p. 1428).13 The location of the public housing in the inner city has caused many problems to the public housing project. The local corruption in many cities affects the public housing. Alienation and powerlessness is the greatest problem affecting the public housing. In case of any catastrophe like earthquake, many residents in public housing seek for shelters in government offices like post offices. Any measure to get temporary shelter is obscured by the protocols and warnings from those in charge and at other times, the residents are denied access to these facilities. The residents are under the mercies of the government, and they have no say on anything affecting them. The residents are denied degree of ownership where the quasi government controls the public housing (Jacob 2004, p.248). The residents in public housing cannot determine when to move out. The housing alternative for the public housing is not economically feasible. The imbalance between tenants and landlords is unavailable in public housing where the tenant depends on the housing authority in offering for their shelters (Jacob 2004, p.251). Conclusion10 Many urban areas have poor housing conditions. This paper has discussed in details the context of the public housing. Various problems associated with the public housing have been comprehensively covered in this paper. These constraints can be historical, economic or social. The problems by the government tends to be beyond all the other effects since public housing is considered as accentuating poverty, which has compounded to different problems both for the communities and agencies seeking to make investments. Underinvestment has been low especially for low income earners. This has led to the emergence of the vicious circle where the decline in investment reduces the financial viability of the sector. These policies require counteracting to prevent the compromise associated with the decline in the stock levels. Lack of investments has resulted to increase in poverty and the failure of the policies. This is contrary to the expectations from the public governance, which is required to be committed in enabling housing for the low income households. Therefore, private housing has been on demand because it allows for accumulation of wealth. Management of the national public housing should be improved in order to boost the ambitions and encourage broader economy that will create sustainable equity gains. The housing policies should be neutral to enhance efficiency in the economy. Bibliography Balchin Paul, David Isaac, and Jean Jinghan. Chen. Urban Economics: A Global Perspective. Hampshire: Palgrave, 2000. Cisneros, Henry, and Lora Engdahl. From Despair to Hope: The New Promise of the Public Housing in America's Cities. . Washington, D.C.: The Brookings Institution, 2009. Garb, Margaret. “Morality, Housing and Health: "Tenement Problem" within Chicago." The American Journal of Public Health 93 (2003): 1420-1430. Glaeser, Edward and Joseph, Gyourko. Rethinking of the Federal Housing Policies. Washington, D.C.: The AEI Press, 2008. Griffiths, Elizabeth & Tita, George. Homicide In and Around Public Housing: Is Public Housing a Hotbed, a Magnet, or a Generator of Violence for the Surrounding Community? Social Problems 56 (2009): 474-493. Jacob, Brian A. "The Public Housing, the Housing Vouchers, and the Student Achievement: Evidence from the Public Housing Demolitions in Chicago." The American Economic Review 94 (2004): 233-258. Ludwig Jens, Duncan Greg & Hirschfield, Paul . “Urban Poverty and the Juvenile Crime: from the Randomized Housing-Mobility Experiment." The Quarterly Journal of Economics 116 (2001): 655-679. Nechyba, Thomas and Walsh, Randall. "The Urban Sprawl." International Journal of the Economic Perspectives 18 (2004): 177-200. Read More