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Unformatted text preview: 1 The Relationship Between Demographic Changes and Future Housing Demand in Indiana: A Preliminary Look from the Census
G.H. Lentz and K.S. Maurice Tse Graduate School of Business, Indiana University This article summarizes a portion of a report prepared by the authors for the Housing Finance Authority of the State of Indiana to determine the adequacy and affordability of the supply of housing within the state to meet the current and projected future needs of the state's diverse household population.1 To assess the housing situation in Indiana, the report addressed the following questions: How are demands for housing in Indiana changing in accordance with trends in demographics? What is the condition and what are the trends of housing affordability in Indiana, especially for low to moderate income homeowners and renters? What is the condition and what are the trends in the adequacy of the stock of housing, with housing adequacy being defined in terms of the physical conditions of the housing units (physical adequacy) and in terms of the extent of overcrowding (spatial adequacy)? This article addresses only the first of these questions, the relationship between demographic changes and future housing demand in Indiana. Unfortunately, large blocks of information from the 1990 Census, particularly data relating to income and housing conditions at the state level, have not as yet been released. Therefore, the portions of the report dealing with housing affordability and the habitability conditions of the housing stock within Indiana are incomplete. Rather than relate these portions of the report at this time, we prefer to wait until more information is released from the Bureau of the Census. HOUSING DEMAND 1 The report was prepared to assist the state comply with Department of Housing and Urban Development (HUD) regulations (24 CFR Part 91, Federal Register , Vol. 56, No. 23, Monday, February 4, 1991, p. 4480.), promulgated under the mandate of the Cranston-Gonzalez National Affordable Housing Act enacted in 1990, that require states and localities to develop and submit to HUD a Comprehensive Housing Affordability Strategy (CHAS) in order to be eligible to receive housing related assistance under various HUD programs. All of the data used to prepare this report came from the 1970, 1980, and 1990 decennial Censuses. Census data was collected and summarized for the state as a whole and for individual counties, MSAs, economic regions, and, where available, for selected cities and townships. In this article, only data at the statewide level is summarized. 2 Housing demand refers broadly to the number and types of housing units demanded in a population. Housing demand is essentially local in nature. It arises primarily from two sources. The first source is area demographics. Demographics constitutes the raw material of housing demand; it establishes the need for housing. The second source of housing demand is the current and expected future income of households. Income provides households with the economic ability to obtain housing units. Income, that is to say, converts the need for shelter into effective demand for housing. For the majority of households, household income is principally a function of the employment opportunities available to the household head and the other working members of the household. But for householders (heads of households) who are retired, elderly, unable to work, or whose income is below a certain level, income comes largely from pensions and retirement plans and from entitlement programs such as social security and welfare payments. Population Changes and Housing Demand Demographic, or population, variables are important determinants of the demand for housing. Demographic variables relevant to housing can be divided into three major categories, as follows: 1) the size of a population, 2) the composition of the population, and 3) the number and types of households that are formed by individuals in the population. Projections of housing demand generally begin with demographics. POPULATION SIZE. The size, or volume, of the population at any one time is not of itself particularly important for assessing housing demand. Much more important for housing demand are changes in the size of the population as a whole, and of subgroups within the population. Population growth or decline, and the rate of growth or decline, are the dynamic components of population size. Changes in the size of a particular area's population come from additions to and subtractions from the area's population resulting from births, deaths, and migrations of people into (in-migrations) and away from (out-migrations) an area. 3 Population growth has slowed dramatically in Indiana over the past 30 years. Between 1960 and 1970, Indiana's overall population increased by 11.4%, from 4,662,498 to 5,193,669. From 1970 to 1980, the population increased by 5.7 percent to 5,490,224. But from 1980 to 1990, the population increased by less than 1 percent to 5,544,159. POPULATION COMPOSITION. Population composition refers to the makeup of the population, with individuals grouped into different age, sex, income, racial and ethnic, and other categories. Changes in population composition are a function of relative rates of births, deaths, and migration among different population groups. Only the age and racial/ethnic composition of Indiana's population were examined in the report. Age Composition of the Population The age distribution of the population and changes in the age distribution are important for assessing housing demand because householders in different age groups tend to exhibit different housing demands. Moreover, changes in the size of (growth or decline) of particular age groups have important implications for future housing demand. Trends in the age profile of the population need to be considered to formulate a picture of current and future housing demand. We constructed the age profile of the population of the state to reflect householder age groupings used by the Bureau of the Census. The householder age groupings used by the Bureau of the Census are as follows: 15 to 24, 25 to 34, 35 to 64, 65 to 74, 75 to 84, and 85 and over. The youngest householder population group, age 15 through 24, insofar as they form separate households (i.e., are not dependents or residents of group quarters or institutions, such as university dormitories) tend largely to occupy rental housing. Householders in the 25-34 age bracket have been the largest source of first-time homeowners, although a substantial portion of householders in this age bracket continue to be renters. The large majority of householders in the 35 -64 age bracket are homeowners, and householders in this age bracket are the major source of second round, or upgrade, homeowners. 4 Elderly householders, those age 65 and over, generally tend to prefer housing units of moderate cost that permit them to live independently for as long as they can. This may mean "trading down" to smaller homes or perhaps returning to rental units. But a large portion of elderly households also continue to live in the housing units in which they have been living for some time, thus indicating a possible need for maintenance and repair assistance for elderly homeowners. The super elderly, those 75 and over, tend to have a much greater need for assisted housing facilities or group quarters, such as nursing homes. However, while many of the superelderly may not be able to live fully independent lifestyles, they often do not need the full services of a nursing home, which means other options for assisted living may be desired. Table 1 displays the number of persons in each of the above age brackets for the census years of 1970, 1980, and 1990, with the exception that the 75-84 and 85 and over brackets have been collapsed into one bracket, that of age 75 and over. The under 15 age bracket is shown for completeness. Figure 1 displays the age profile of the state by the percentage of the total state population in each bracket for the same three census periods. 5 TABLE 1 NUMBER OF PERSONS BY AGE CLASS, AND PERCENTAGE CHANGES IN SIZE OF THE AGE CLASSES Percent Change: 1970-80 1980-90 5.71% -0.81% 14.32% 36.74% 3.89% 17.32% 20.42% .98% -6.97% -19.37% 4.65% 11.73% 14.72% 25.21% 1970 State Population Under age 15 Age 15-24 Age 25-34 Age 35-64 Age 65-74 Age 75 and older 5,193,669 1,317,325 916,964 639,471 1,612,822 298,723 195,086 1980 5,490,224 1,306,645 1,048,289 874,408 1,675,498 350,459 234,925 1990 5,544,159 1,215,632 845,214 915,109 1,872,008 402,041 294,155 1970-90 6.75% -7.72% -7.82% 43.10% 16.07% 34.59% 50.78% The Census data show a very different trend in the age profile of the state for the 1980s than for the 1970s. Over the decade of the 1970s, the largest numeric and percentage increase occurred in the 25 34 age bracket, with a numeric increase of approximately 235,000 and a percentage increase of 36.7%. The smallest percentage gain occurred in the 35-64 bracket (3.9%), although this bracket still had a sizable numeric increase of 62,676. Over the decade of the 1980s, the 35-64 and 25-34 groups reversed positions with respect to relative gains. The 35-64 age group showed the largest jump, with a 11.7% increase from 1980 to 1990 (a numeric increase of about 196,500). The 25-34 age group, on the other hand, showed only a 4.7% rise (a numeric increase of about 41,000). The changes relating to the 25-34 and 35-64 age groups over the past two decades reflect the advancement of the "baby boom" generation to "middle age," the entrance of the "baby bust" generation into adulthood, and possibly the large out-migration of younger adults that occurred in the early 1980s. The effect of the "baby bust" is evident in the trends of the youngest population groups. From 1970 to 1980, the 15-24 age group increased by 131,325, a 14.3% rise, but from 1980 to 1990, this age group decreased by 203,075, a 19.4% decline. The size of the under 15 age group as well as this age 6 bracket's share of the state's population declined over each of the past two decades, clearly indicating a long-term influence of the "baby bust" on future housing demand. Significant numeric and percentage gains occurred in the elderly population. The 65-74 age bracket grew by 51,736 from 1970 to 1980, a 17.3% increase, and by 51,582 from 1980 to 1990, a 14.7% increase. The 75 and over age bracket grew by 39,839 from 1970 to 1980, a 20.4% increase, and again by 59,230 from 1980 to 1990, and increase of 25.2%. The increases in the two elderly population groups reflect the general aging of the population. The percentage of the state's population age 65 and older increased from 9.6 percent in 1970 to 12.6 percent in 1990. Age-Profile Projections For a five or ten year projection of housing demand, the fertility component of population change is not directly relevant because the people who will be making housing decisions five years from now are already born. The fertility component, though not important for forecasting the aggregate need for housing within a five or ten year forecast period, can, however, be important for decisions relating to the type of housing unit demanded since it can affect expectations about family and household size. The mortality component of population change is also not important unless some catastrophic event or plague-like illness occurs which sharply increases the mortality within age groups that are important consumers of housing units. Thus, for a five or ten year projection of housing demand, focus is normally placed on those age segments of the total population that will be needing housing within that time span. These are the segments of the population that will be forming new households or that are already formed as housing consuming households but who will be demanding different housing units because of changes in income, in jobs, in location preferences, and in family and personal situations. Barring significant changes in migration, projecting changes to those age segments of the population that are likely to be demanding 7 housing in five or ten years into the future involves essentially following very predictable changes in those age brackets through time.2 Figure 2 displays the actual 1990 population and the Bureau of the Census population projections for years 1995 and 2000. Bureau of the Census projections indicate that the 35-64 age group will continue to experience the largest gain in the 1990s, with a projected numeric increase of about 132,700 from 1990 to 1995 and a numeric increase of about 305,900 from 1990 to 2000, a 16.3% rise over the decade. On the other hand, the 25-34 age group is projected to experience a decline of over 29,000 between 1990 and 1995 and a decline over the decade of about 96,100, a 10.5% decrease. The youngest age group, age 15-24, is projected to increase about 18,600 from 1990 to 1995, but then decline about 16,200 from 1995 to 2000, yielding a net increase over the entire decade of only about 2,500, a mere .29% rise. Contrary to the trend of the past twenty years, the 65-74 age group is projected to decline over the decade of the 1990s, whereas the over 74 age group will experience a sizable increase. The Bureau of the Census projects a decrease in the size of the 65-74 age group of about 37,200 from 1990 to 2000, a decline of 9.25% over the span of the decade. The projected decline in the size of this age cohort could well reflect the decrease in the fertility rate during the Great Depression.3 The 75 and over age group is projected to increase about 38,600 from 1990 to 2000, a 13.1% rise. The above population projections clearly indicate that the growth of the Indiana population in the 1990s will occur in the maturing segments of the population. The sizable increase projected for the 3564 age group implies that the largest demand for housing will come from those already housed who move for various reasons, such as upgrading their housing because of an increase in household income, relocating because of job changes, or moving because of changing family situations (e.g., increase in the number of children, divorce, or emptying of the nest). The increase in the elderly population implies an
2 Net migration ("in" or "out") is another way in which the size of the housing-demanding segments of the population can change within a five or ten year forecast period. For this report, however, the information needed to forecast changes in the economic base of localities that would influence migration was not readily accessible to us.
3 Demographers tell us, however, that this projected drop in the 65-74 age group will only be temporary; the elderly population (age 65 and over) is expected to increase sharply in the years further out as the "baby boom" generation passes from middle age to elderly. 8 increase in the demand for housing and housing services suitable for aging householders in varying states of health and physical capacity. These projections also indicate a sharp drop -off in the younger segments of the population, who comprise the potential new housing consumers. The decline in the number of people in the 25-34 age group will have a substantial impact on the future demand for both rental housing and single-family homes, and thus on future housing construction. Historically (in recent history at least), this group has been the source of most first-time homebuyers. The very small increase projected for the youngest householder age group (age 15 -24) indicates a further decline in the demand for rental housing, but it also implies that without a sharp rise in in-migration, demographically driven housing demand in Indiana will be depressed into the 21st century. Racial/Ethnic Composition The ethnic and racial composition of the population is a relevant consideration for housing demand insofar as households within racial and ethnic groupings exhibit different housing demands or face distinct difficulties which affect their housing choices. Difficulties which racial or ethnic minorities face with respect to their housing choices may take the form of significantly lower household income, patterns of past and current discrimination, and/or difficulties in obtaining financing. These difficulties as well as the social, linguistic, and other types of support that comes from living with one's kind can result in pressures for minority households to locate their housing units within distinct subareas of local communities. Another way in which the ethnic and racial composition of the population can be relevant is by the way their presence can affect the housing decisions of other population groupings. For example, housing data show that large number of whites with the economic resources to do so tend to avoid areas that contain heavy concentrations of blacks or other minorities or areas that are perceived to be "in transition" to substantially minority neighborhoods. As a result of these influences, cities and other 9 localities with significant populations of blacks and other minority groups tend to exhibit marked segregation in terms of housing patterns. The racial distribution of Indiana's population remained fairly stable from 1980 to 1990, with only small changes. The two racial groups of significant size in Indiana are white and black. In 1990, whites constituted just over 90 percent of the state's population, very nearly the same percentage as 1980. The black percentage of the population increased slightly from nearly 7.6% of the state's population in 1980 to about 7.8% in 1990. Asians and Pacific Islanders had the largest percentage increase from 1980 to 1990 (a 54.5% rise), but their numbers remain very small in Indiana comprising only .68% of the state's 1990 population. "Native Americans," that is, American Indians, Eskimos, and Aleutian Islanders, comprised only .23% of the state's population in 1990, up from .18% in 1980. In 1990, Hispanics made up only 1.78% of the state's population, but their percentage of the state's population increased from 1.58% in 1980.4 Members of minority groups, however, are not evenly distributed throughout the state. In 1990, blacks comprised about 25% of Lake county, 21% of Marion county, and 10% of Allen county. The largest percentage of Hispanics is in Lake County, where they comprise approximately 9.4% of the county's population. The second largest percentage of Hispanics is in Porter County, where they comprise about 3% of that county's population. Whereas they comprised only .68% of the state's population in 1990, Asians and Pacific Islanders constituted about 3.7% of Tippicanoe County's population (Purdue University and Subaru-Isuzu America) and 2.5% of Monroe County's population (Indiana University). Household Demographics It is not possible to translate changes in the size and age distribution of the population directly into a forecast for required housing units. This is because housing requirements also depend on the ways
4 Persons of Hispanic origin are an important minority group, but they do not comprise a distinct racial group. Indeed, Hispanics constitute a very heterogeneous grouping whose members can belong to one of several racial groups. Because Hispanics are not a distinct racial group, adding the Hispanic percentages of the total population to the percentages of the racial categories will sum to more than one. 10 and on the rate that individuals in the population form household units. Households, not individuals, are the housing demanding population units. A household is defined as one or more persons who occupy a housing unit. The number and type of household units that are formed are influenced by economic and sociological variables as well as population changes. Patterns of household formation reflect the economic ability of individuals to set up and maintain separate households. They also reflect life-style preferences and tendencies that shape the propensity of individuals in the population to desire children, to form and break family units, and to live with individuals with whom they have no family relationship. Decisions by individuals about whether and what type of household to form are thus strongly influenced by economic and sociological variables. New households are created primarily when individuals break away from existing household units to form separate households, either alone with one or more other individuals. But new households can also be formed by individuals moving out of institutions or group housing (e.g., university dormitories, prisons, nursing homes, etc.) and setting up separate households. Separation from existing households units can come through maturation, as when grown children leave the household of their parents, through divorce or separation by which married individuals break into separate households, or through individuals leaving existing non-family households to form separate households. Households terminate when household members die, move into institutions or group quarters, or merge with other existing household units. Trends in Household Formation and Composition Two broad categories of households are identified by the Bureau of the Census, family and nonfamily (or primary individual) households. These two categories are distinguished on the basis of the relationship between the household head and the other members of the household. A family household exists when all occupants are related to the householder (household head) by blood, marriage, or adoption. A non-family (primary individual) household refers to individuals either living alone or with 11 nonrelatives. Three types of family households are distinguished by the Census Bureau. These are family households with both a husband and a wife (married couple households), family households with female heads (no husband), and family households with male heads (no wife). Types of non-family (primary individual) households include individuals living alone, individuals sharing housing units with other persons, and individuals living with persons of the opposite sex (unmarried couples with no children). The types of households that are formed have implications for the kinds of housing that are demanded. While there is not a one-to-one correspondence between household type and the type of housing demanded, we nonetheless observe that the type of housing that is demanded tends to vary by household type. In general, the dominant type of housing demanded by married couple households, and especially by married couples with children, is the single-family, owner -occupied house. Other types of households tend to be renters. An important demographic development affecting the demand for housing is that a fundamental shift in household composition has occurred in this country over the past two decades. A review of the census data reveals that the traditional married couple family household has not been the type of household which Americans have been forming in largest numbers. This trend is also found in Indiana, as is clearly apparent in table 2 and figures 3a and 3b. Table 2 shows the number of households in the state of Indiana by household type for 1970, 1980, and 1990. Figure 3a displays these numbers in the form of a "household profile," and figure 3b summarizes them as a pie chart. 12 TABLE 2 NUMBER OF HOUSEHOLDS BY HOUSEHOLD TYPE FOR THE STATE AS A WHOLE Percent Change: 1970-80 1980 -90 5.71% 19.81% 6.20% -11.36% 52.42% 27.22% 35.84% 13.38% 60.13% 33.65% .98% 7.10% - 3.56% - 9.95% 24.28% 16.04% 51.10% 41.08% 25.34% 17.03% 1970 State Population Total Households Married Couple HHs % of all HHs Female Headed HHs % of all HH s Male Headed HHs % of all HHs Non- Family HHs % of all HHs 5,193,669 1,609,494 1,173,563 72.92% 114,883 7.14% 29,574 1.84% 291,474 18.11% 1980 5,490,224 1,928,375 1,246,362 64.63% 175,109 9.08% 40,174 2.08% 466,730 24.20% 1990 5,544,159 2,065,355 1,202,020 58.20% 217,628 10.54% 60,703 2.94% 585,004 28.32% 1970 -90 6.75% 28.32% 2.42% - 20.18% 89.43% 47.62% 105.26% 59.95% 100.71% 56.41% The traditional husband and wife family units (married couple households) have grown far more slowly over the span of the two decades than any other type of household, although the number of such households remains far greater than those of other household types. Married couple households increased only 2.4% from 1970 to 1990, and from 1980 to 1990, the number of married couple households actually declined 3.6%. On the other hand, the number of non-family households increased about 101% over the two decades. The number of female-headed family households (no husband) increased more than 89% over this twenty year period. The number of male-headed family households (no wife) increased a whopping 105%, although they are far fewer in number than female-headed family households. The rise in the formation of non-family (primary individual) and single parent households during the past two decades has been propelled by socioeconomic changes that have affected all age groups. Young adults have been delaying marriage in the pursuit of education, careers, or simply self-fulfillment. They have been setting up their own households, living with unrelated individuals, or setting up a household with an intimate companion. Young females have been increasingly willing to raise children born out of wedlock and to rear them without a husband. Existing family households have been 13 increasingly uncoupled by separation and divorce. Surviving elderly spouses have displayed an increasing tendency to have their own living quarters rather than live with relatives. These tendencies, as well as others, have all led to the increase in non-family (primary individual) households and in single parent families. The sharp rise in the divorce rate over this twenty year time period no doubt played a big role in the large increase in single parent households. The number of divorced and separated persons for 1,000 persons in the population age 15 and above increased significantly from 1970 to 1990. The divorce/separation rate among persons age 15 and above was 34.5 per 1,000 persons in 1970, 55.0 per 1,000 in 1980, and 108.4 per 1,000 in 1990. As a result of the above trends, the number of households increased over in the decades of the 1970s and 1980s at a much greater rate than the population. As seen in figure 4, the number of households in Indiana showed a sizable increase while the state's population growth leveled off. Indiana's population increased 5.7% from 1970 to 1980 and less than 1% from 1980 to 1990; but the number of households increased 19.8% and 7.1%, respectively, over the same two census periods. That the number of households grew at a faster rate than the population is revealed by the increasing household yield. The household yield is defined as the number of households that are formed from the population. The household yield increased from 309.9 per each 1,000 individuals in the population in 1970, to 351.2 per 1,000 in 1980, to 372.5 per 1,000 in 1990. Although the number of household units demanding housing has increased, these same trends have also led to a reduction in household size. The average household size decreased from 3.23 in 1970 to 2.85 in 1980 to 2.68 in 1990. Variation of Household Type Among Racial/Ethnic Groups In addition to examining the types of households being formed by the population as a whole, we also looked at how the formation of household types varied across racial groups and Hispanics. The 14 distribution of household types across the different racial groups and Hispanics for the state as a whole is summarized in table 3. TABLE 3 DISTRIBUTION OF HOUSE HOLD TYPES ACROSS RACIAL GROUPS AND HISPANICS: HOUSEHOLD TYPE AS A PERCENT OF THE TOTAL HOUSEHOLDS IN EACH GROUP, 1990 Family Households: Married Couple Families: With related children White Black Asians & P.I. Am. Ind., etc Other races Hispanic 29.0% 18.5% 38.1% 28.5% 41.6% 37.7% No related children 31.2% 14.4% 21.1 22.8% 15.8% 20.0% Other families:: Male householder, no wife present: With related children 1.5% 2.8% 1.3% 2.9% 4.0% 3.2% No related children 1.2% 2.0% 1.7% 1.5% 2.2% 2.2% Female householder, no husband present: With related children 5.7% 24.5% 4.4% 11.3% 13.9% 11.2% No related children 3.2% 6.7% 2.4% 3.7% 3.3% 3.3% Householder living alone 23.9% 26.9% 22.4% 22.7% 14.0% 17.3% Householder not living alone 4.2% 4.2% 8.7% 6.6% 5.2% 5.2% Non -family households: Table 3 reveals that the propensity to form different types of households varies considerably across racial and ethnic groups. In particular, for blacks, the proportion of female-headed households with children to the total number of black households far exceeds that of the other groups listed. In 1990, female-headed households with children constituted 24.5% of all black households, whereas married couple families with children constituted 18.5% of all black households. In comparison, female -headed households with children constituted 4.4% of Asian and Pacific Islander households, 5.7% of white households, and 11.2% of Hispanic households. Household Income by Household Type Current household income by household type was not available to us at the state level. From national data, however, we can see that income tends to vary rather widely among the different household types. Figure 5 displays the median income of households in the U.S. by household type for 1989, the latest year for which this published data series is available. As is clearly apparent, married couple 15 families have the highest median income of any household type. Female-headed households have the lowest household income. Female-headed family households have a median household income that is approximately 45% of that of married couple families, and the median income of female-headed nonfamily households is only 36% that of married couple families. Thus, the types of households that are being formed in society have an impact on housing demand in part through an income effect. Possible Connection Between Household Formation and Homeownership Changes in household formation may well be related to recent trends in homeownership. The percentage of households that were homeowners decreased in 1990 from earlier periods. The homeownership percentage in the state for 1970 was 71.6%, increasing slightly to 71.9% for 1980. However, the percentage of homeownership decreased to 70.2% in 1990, indicating a decline of nearly two percentage points in the homeownership rate over the 1980s. Nonetheless, Indiana's homeownership ratepf 70.2% in 1990 is considerably higher than the national average of 64.2%. The traditional husband-wife (married couple) household category has the highest rate of homeownership of all the household types. In contrast to the traditional family household, nontraditional households tend not to be homeowners. There is and always has been a much lower rate of homeownership in these household types, at least in part because of the lower household income of these household types. Thus, the decline in homeownership which we have witnessed in recent years can perhaps be partially explained by the change in the types of households that were formed in the 1980s.5 Further research is needed, however, to establish the strength of the relationship between the shifts in household formation discussed above and the decline in homeownership. 5 As suggested above, the shift away from the traditional married couple households interacts with affordability issues since the nontraditional household tends to have lower incomes than the married couple household. The decline in homeownership may also reflect affordability and mortgage credit problems affecting all household types stemming from higher downpayment requirements and tougher underwriting standards imposed by lenders in recent years. 16 CONCLUSION This article attempted to relate demographic changes in Indiana to future housing demand in the state. Basic trends in population changes associated with housing demand were examined. In addition to charting trends of basic population changes, we also showed that a key to forecasting the aggregate demand for housing is what happens to household formation in the state, i.e., the numbers and types of households that are formed or that migrate into the state and its various localities. One conclusion from "sheer demographics" is that demographically -driven housing demand in the next decade or two will be less, perhaps far less, than it was in past two decades. Apart from demographic dynamics, other keys to housing demand are employment opportunities and income prospects in the state. The latter were not addressed in the report because information required to forecast changes in the economic base of localities was not accessible to us. Future research into housing demand at the state level should attempt to investigate the linkages between employment opportunities within Indiana and its localities and housing demand. Such research would entail developing models to link forecasts of employment growth or decline and of the growth or decline of the earnings of working-people within the state to forecasts of housing demand. Housing demand is essentially a derived demand which stems from the housing needs and the economic capabilities of households who reside in particular localities. People locate in communities in a state like Indiana, with relatively little in the way of climatic or scenic amenities, largely because of employment opportunities. Consequently, an employment-based housing model is needed to understand and measure important factors shaping the dynamics of housing demand within the state. Another avenue of future housing research is to examine the availability of housing for different segments of the population, particularly for those segments who are disadvantaged in the housing market because of low incomes. Insufficient research of this type has been done at the state and local levels. Information is emerging that the mismatch between the demand for low-income housing and the supply is increasing and could grow to serious proportions in many areas of the nation. Right now we do not have sufficient information to accurately answer the extent to which this problem exists in Indiana. ...
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