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Rental Housing Quality in Bloomington, IL Lindsey Haines.

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Presentation on theme: "Rental Housing Quality in Bloomington, IL Lindsey Haines."— Presentation transcript:

1 Rental Housing Quality in Bloomington, IL Lindsey Haines

2 Research Question 33% of housing in Bloomington is renter occupied About 40% on West Side Key issues in West Bloomington Neighborhood Plan Absentee Landlords Housing Quality Enforce the building code What factors determine the quality of the rental housing stock in Bloomington, IL?

3 Theory Landlord decisions drive property quality What drives landlord decision-making? Owner-occupant, Resident, Absentee Landlord Number of properties owned Property quality Neighborhood quality Non-economic factors

4 Economic Incentives Maintenance costs increase with age of property Return to investment (Dubin 1998) Not as high in poorer quality neighborhoods Neighborhood quality creates a rent ceiling Discourages investment Self-fulfilling prophecy of neighborhood deterioration

5 Non-economic Factors Local landlords may be more likely to correct housing deficiencies due to a greater awareness of problems (O Hare 1981) Single property landlords may have more time and energy to focus on the property Community pride as a possible explanation of local landlord superiority (Porell 1985) Local landlords internalize some negative externalities associated with poor quality housing because they live in the community Social responsibility

6 West Bloomington IWU Plan Area

7 History of West Bloomington Middle-class and working class neighborhood until 1930s Great Depression: decline in status and upkeep Upwardly mobile and well established people left the neighborhood. Large houses converted into apartment buildings Although many structures were broken up into many units, an owner typically lived in or nearby the multi-family housing units. Well into the 1960s these neighborhoods remained stable and successful. 1970s: Neighborhood Decline Introduction of cheap repair materials Decline in building trades standards Structures start to deteriorate Transition from owner-occupant to absentee landlords

8 West Bloomington Classified as a Slum and Blighted Area Building code violations Inadequate public infrastructure (sidewalks, sewers, etc) Zoning violations Vacancies and high business turnover CharacteristicPlan AreaWhole City Median HH Income$23,845/year$46,496/year HS Diploma57%92% Density of Single Parent Families 26%24% Density of Minority Population 29.5%15% Avg. Age of Housing Stock110 years old35 years old Increased foreclosures, property disinvestment Lack of commercial facilities (grocery stores, pharmacies, etc) Overcrowding High crime rate Socioeconomic data, mapped by the 2000 Census, indicates the following:

9 Median Household IncomeMinority Population

10 Hypotheses Hypothesis 1: Local landlords maintain their stock better than non-local landlords. Hypothesis 2: Landlords owning multiple properties do not maintain their properties as well as single-property landlords.

11 Empirical Model Ordered probit model (based on Porell 1985) Quality = Property + Neighborhood + Landlord Bloomington Model Q n = ß 0 + ß 1 AGE+ ß 2 SQFTperUNIT+ ß 3 TYPE+ ß 4 HHINC + ß 5 RACE+ ß 6 RENT + ß 7 LLRES + ß 8 LLUNITS+E Westside Model Q n = ß 0 + ß 1 AGE+ ß 2 SQFTperUNIT+ ß 3 TYPE+ ß 4 HHINC + ß 7 LLRES + ß 8 LLUNITS+E

12 Variables Dependent Variable : Housing Quality City of Bloomington Rental Inspection Program Index Definition of Rental Property Classifications Class Value in Model Definition A4 The building is in excellent condition and has minor or no violations of applicable city codes. B3 The building is in good condition and has minor violations of applicable city codes and the violations do not pose an immediate threat of danger to life, health, and safety of the occupants. C2 The building is in sound condition and has major or minor violations of applicable city codes that do not pose an immediate threat of danger to the life, health, and safety of the occupants. D1 The building has critical violations and is either unsafe, contains unsafe equipment, is unfit for human occupancy or is unlawful. *Source: City of Bloomington Rental Inspection Program Class D Class A

13 Variables VariableDefinition Expected Sign Source AGEAge of the structure (as of 2009)- Bloomington Assessor SQFTSquare footage per unit (as of last inspection)? Bloomington Assessor RACE Proportion of white residents in units respective block group (2000) +US Census HHINC Median household income of units respective block group (2000) +US Census TYPE Type of unit 1 if attached, 0 if detached - Bloomington Assessor LLRES Residence of units landlord (as of last inspection) 1 if in Bloomington-Normal, 0 if not - Bloomington Assessor LLUNITS Number of properties owned in sample 1 if multiple, 0 if single - Bloomington Assessor Independent Variables

14 Data Random sample of 300 rental properties All 225 West side rental properties Descriptive Statistics VariableBloomingtonWestside Quality A69.4%44.2% Quality B19.8%36.6% Quality C6.0%18.3% Quality D4.8%1%* LL Res in BN69.8%80.4% LL Res out BN30.2%19.6% LL Owning Single Unit57.5%36.2% LL Owning Multi Units42.5%63.8% Attached Unit53.6%44.2% Detached Unit46.4%55.8% * Not including condemned properties. 11 of 26 located on West side.

15 Results VariableB Bloomington B Westside AGE-.016*-.015** SQFT.000 TYPE-.031.484* RACE.044*- HHINC-6.233E-6- LLRES.220.176 LLUNITS-.044.081 Pseudo R 2.163.065 *Significant at the.05 level ** Significant at the.001 level

16 Analysis Hypothesis 1: Local landlords better maintain their stock than non-local landlords Hypothesis 2: Landlords owning multiple properties do not maintain their properties as well as single-property landlords

17 Analysis Age of properties negatively affects quality…follows theory of disinvestment with property age. Whiteness of block groups positively affects quality, even when controlling for household income. Indicates presence of housing discrimination. Detached housing is significantly higher in quality for Westside…makes sense historically. Indicates that it does not violate the building code.

18 Policy Implications Work to maintain aging housing Establish the West Bloomington Revitalization Partnership as a CHDO ( Community Housing Development Organization) Non-profit can use HUD funds to purchase/rehab housing Crackdown on housing discrimination Outreach to minority tenants Prairie State Legal Services Enforcement of proper building code

19 Works Cited American Factfinder. Housing Indicators United States Census. 10 Oct 2009.. City of Bloomington Property Assessment Property Database Assessors Office. City of Bloomington Township 10 Oct 2009.. Clapham, D. (1992) The Effectiveness of Housing Management Social Policy and Administration 26(3), 209-225. Dubin, R.A. (1998) Maintenance Decisions of Absentee Landlords under Uncertainty Journal of Housing Economics 7, 144-164. Goodman, J.L. (1977) Causes and Indicators of Housing Quality Social Indicators Research 5, 195-210. Porell, F.W. (1985) One Mans Ceiling is Another Mans Floor: Landlord/Manager Residency and Housing Condition Land Economics 61(2), 106-117 Registered Rental Property Class and Date of Issue City of Bloomington Rental Inspection Program. 18 Aug 2009. 10 Oct 2009.. Renters Handbook (2005) Prairie State Legal Services. Rosenthal, S.S. (2008) Old Homes, Externalities, and Poor Neighborhoods. A Model of Urban Decline and Renewal. Journal of Urban Economics 63, 816-840. West Bloomington Neighborhood Plan (2008) West Bloomington Task Force. West Bloomington Plan Area and Building Conditions Report (2008) City of Bloomington.

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