Simulating Housing Choice for Low-Income Urban Households

Authors: Anand Sahasranaman, Vishnu Prasad, Aditi Balachander – January 2016

Abstract:

It has been argued theoretically that the nature of risks confronting low-income households – income volatility, wealth allocation and the need for mobility – makes them unsuited to mortgage-based ownership housing. Testing this theory by mathematically simulating the effect of these risks on the wealth of a stylised urban low-income household over a twenty year period, we find that rental housing minimises the risk of undesirable wealth fluctuations of the households and is a much more appropriate housing proposition for low-income households, thus corroborating the theoretical arguments. In view of our results, we believe that the policy environment must incentivise the creation of rental housing solutions for low-income households.

Click here to read more.

Comments are closed.