We estimate how households trade off immediate costs and uncertain future benefits that occur in the very long run, 100 or more years away. We exploit a unique feature of housing markets in the U.K. and Singapore, where residential property ownership takes the form of either leaseholds or freeholds. Leaseholds are temporary, pre-paid, and tradable ownership contracts with maturities between 99 and 999 years, while freeholds are perpetual ownership contracts. The price difference between leaseholds and freeholds reflects the present value of perpetual rental income starting at leasehold expiry, and is thus informative about very long-run discount rates. We estimate the price discounts for varying leasehold maturities compared to freeholds and extremely long-run leaseholds via hedonic regressions using proprietary datasets of the universe of transactions in each country. Households discount very long-run cash flows at low rates, assigning high present value to cash flows hundreds of years in the future. For example, 100-year leaseholds are valued at more than 10% less than otherwise identical freeholds, implying discount rates below 2.6% for 100-year claims.

/pdf/very-long-run-discount-rates-4aajee41si.pdf

Very Long-Run Discount Rates

Home garden use during COVID-19: Associations with physical and mental wellbeing in older adults

Background Most older adults wish to stay at home during their late life years, but physical disabilities and cognitive impairment may force them to face a housing decision. However, they lack relevant information to make informed value-based housing decisions. Consequently, we sought to identify the sets of factors influencing the housing decision-making of older adults. Methods We performed a systematic literature search for studies evaluating any factors influencing the housing decisions among older adults over 65 years old without cognitive disabilities. Primary research from any study design reported after 1990 in a peer-reviewed journal, a book chapter or an evaluated doctoral thesis and written in English, French or Spanish were eligible. We extracted the main study characteristics, the participant characteristics and any factors reported as associated with the housing decision. We conducted a qualitative thematic analysis from the perspective of the meaning and experience of home. Results The search resulted in 660 titles (after duplicate removal) from which 86 studies were kept for analysis. One study out of five reported exclusively on frail older adults (n = 17) and two on adults over 75 years old. Overall, a total of 88 factors were identified, of which 71 seem to have an influence on the housing decision-making of older adults, although the influence of 19 of them remains uncertain due to discrepancies between research methodologies. No conclusion was made regarding 12 additional factors due to lack of evidence. Conclusion A wealth of factors were found to influence housing decisions among older adults. However, very few of them have been studied extensively. Our results highlight the importance of interdisciplinary teamwork to study the influence of a broader range of factors as a whole. These results will help older adults make the best possible housing decision based on their unique situation and values.

/pdf/choosing-between-staying-at-home-or-moving-a-systematic-2905d2w8qr.pdf

Choosing between staying at home or moving: A systematic review of factors influencing housing decisions among frail older adults.

PURPOSE: This cross-national qualitative study explores how very old people reflect upon relocation and aging in place. DESIGN AND METHODS: Swedish and German data are utilized in this study. About 80 community-living participants, 80-89 years of age, were interviewed with open-ended questions at home by trained interviewers. The interviews were analyzed by using conventional qualitative content analyses. RESULTS: Reasoning about relocation or aging in place in very old age is a complex and ambivalent matter. A variety of reflections, emotions, and behaviors for and against a move are revealed. Reasons to move reflect the urge to maintain independence, to stay in control, and to avoid loneliness. This is mainly expressed reactively. Reasons not to move reflect a strong attachment to the home and neighborhood. Moreover, reasons not to move reflect practical aspect such as economy and strain, as well as fear of losing continuity of habits and routines. IMPLICATIONS: There is a need for society to develop counseling systems to meet very old people's ambivalence and practical considerations to move or not to move. Thus, the ambivalence to stay put or to relocate needs to be further explored from an applied perspective by also taking nonmovers into account.

/pdf/voices-on-relocation-and-aging-in-place-in-very-old-age-a-16k0l78zvf.pdf

Voices on Relocation and Aging in Place in Very Old Age—A Complex and Ambivalent Matter

Although most older people prefer to age in place, nonetheless many do relocate, with a small proportion moving to retirement villages, which provide a purpose designed and built residen- tial and lifestyle environment. Using factor analyses, path analyses, and a push^pull framework, the authors model the decision process of retirees in Australia in order to identify relationships between push^pull factors and predictor variables, using data from a national survey of retirement village residents. The push factors relate to change in lifestyle, home maintenance, social isolation, and health and mobility, whereas the pull factors relate to built environment and affordability, the loca- tional attributes of villages, and the desire to maintain an existing lifestyle. The survey data also identify village attributes considered desirable or undesirable, or important or unimportant. Overall, resident satisfaction with moving is high.

A push-pull framework for modelling the relocation of retirees to a retirement village: The Australian experience

This article examines whether cluster analysis can be used to identify groups of Finnish residents with similar housing preferences. Because homebuilders in Finland have been providing relatively homogeneous products to an increasingly diverse population, current housing may not represent the occupiers' preferences so a segmentation approach relying on socioeconomic characteristics and expressed preferences may not be sufficient. We use data collected via questionnaire in a principal component analysis followed by a hierarchical cluster analysis to determine whether different combinations of housing attributes are important to groups of residents. We can identify four clusters of housing residents based on important characteristics when looking for a house. The clusters describe Finnish people in different phases of the life cycle and with different preferences based on their recreational activities and financial expenditures. Mass customization of housing could be used to better appeal to these different clusters of consumers who share similar preferences, increasing consumer satisfaction and improving profitability.

The Potential for Consumer Segmentation in the Finnish Housing Market

One imperfection in housing markets is imperfect knowledge about legal interests such as ground leases. Both actual reduced legal interest as well as uncertainty surrounding rights and future lease payments for houses constructed on leased land may affect prices relative to houses built on freehold land. We use regression analysis of sales prices of condominium transactions in Helsinki to examine the effect ground leases have on house prices. We find that prices on condominiums constructed on leased lots are discounted at least 5 %, on average. In addition, we see that the announcement of potentially large increases in base rents upon renewal contributes to the discount.

https://link.springer.com/content/pdf/10.1007%2Fs10901-014-9424-3.pdf

The effect of ground leases on house prices in Helsinki

The purpose of this article is to explore the factors influencing residential decisions of Finnish seniors. Analysis draws on qualitative data gathered from in-depth interviews and open-ended survey questions completed by 37 seniors living in three independent living facilities in Finland. Content analysis was used to identify key factors pushing residents out of their former living situations and pulling them into their respective independent living facility. Analysis indicates that different senior houses attract different types of residents. Nevertheless, as a group, they reported similar motivational factors relating to community, physical, and social environments and to their personal circumstances.

Finnish seniors’ move to a senior house: Examining the push and pull factors

Purpose




Even as many countries are facing changes in demographic profile and new types of senior housing developments are becoming more important, there is limited evidence for the development impact of a senior house on surrounding residential property values. The purpose of this paper is to address the void in knowledge, investigating the impact of senior house developments on apartment values in Tampere, Finland.




Design/methodology/approach




To specify valuation effects of proximate senior house development projects, advanced research design combining propensity score matching procedure and hedonic pricing models is used.




Findings




The results show that a senior house development has a significant positive impact on proximate residential property values within a 500 metre radius. The impact is found to be the highest in underdeveloped neighbourhoods. Nevertheless, in neighbourhoods where property values and demand for housing units are higher and senior house developments fall into the criteria of infill development, a premium is lower, but still statistically significant and notable in magnitude.




Research limitations/implications




This paper studies apartment values only in Tampere, Finland, and it is important to notice that local regulations and market conditions may have a notable impact on the outcomes from senior house developments.




Originality/value




This study is the first of its kind to address a number of empirical issues and provide with statistically significant evidence for positive impacts from senior house developments – encouraging investors and developers to build senior houses.

The impact of senior house developments on surrounding residential property values

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Papers

The Potential for Consumer Segmentation in the Finnish Housing Market

The effect of ground leases on house prices in Helsinki

The effect of ground leases on house prices in Helsinki

Finnish seniors’ move to a senior house: Examining the push and pull factors

The impact of senior house developments on surrounding residential property values