Understanding Consumers' Housing Preferences and Aspiration: Comparative Review of Research Approaches in Urban China

1. Understanding Consumers’ Housing Preferences and Aspiration: A comparative review of two research approaches and application in urban Chinaresearch Yizhao Yang, Ph.D. Assistant Professor Department of Planning, Public Policy and Management University of Oregon

2. Housing as a multi-dimensional and multi-scale concept • Housing as a bundle of service • House (shelter) • Social Interaction • Service • Status • Housing as a spatial hierarchy • Housing scheme (Lee, 1968) • House-settlement system (Rapoport, 1977) • Housing unit, micro-neighborhood, macro-neighborhood…(Marans and Rogers, 1975)

3. Understanding Consumers’ Housing Preferences and Aspiration Two Approaches • Hedonic Study • Satisfaction Study

4. Hedonic Housing Study Market prices reflect what consumers value. • Assumptions • Full market information • Free competition • No costs involved in moving and relocation • Common preference for housing attributes and characteristics.

5. Hedonic Housing Study • Conceptual understanding • Lack of theoretical study about what housing attributes matter • Based on researchers’ understanding of a housing market • Generally considered important factors • Unit characteristics (e.g., size, number of bedrooms, number of bathrooms, etc) • Public services (e.g., school quality) • Locational characteristics • Site characteristics (street layout, e.g., cul-de-sac) • Spatial relationship (e.g., proximity to other urban land uses or elements)

6. Hedonic Housing Study Application of hedonic study in the U.S.: • Data • Housing price information based on market transaction (e.g., Multiple Listing Service) • Housing price information based on self assessment (e.g., Census data) • Property assessment information for tax purpose (e.g., government tax assessor’s office) • Functional form • Hedonic regression (often take a linear form). • Housing price = f (housing attributes) • Omission of variables

7. Hedonic Housing Study • Limitation: • Mostly focused on single family houses (rental housing is understudied) • Only for what are available in the market, Impossible to infer what is not available • No consideration given to differential preferences and values that consumers have

8. Example: Sirmans and Macpherson’s study (2003) analyzed 28,828 single-family home sales during two periods (1996-1999 and 2000-2003) in New Jersey-Maryland region

9. Housing Satisfaction Study Consumers’ real experience and subjective assessment as a way to gauge housing performance • Assumptions • Consistency between subjective perception and objective conditions • Inter-person evaluation comparability

10. Objective conditions of a housing attribute. Assessment or perception of a particular housing attribute Characteristics of the evaluator Assessment or perception of individual housing attributes Global assessment of a housing, housing satisfaction Characteristics of the evaluator Housing Satisfaction Study • Conceptual understanding • Satisfaction is the “gap” between what consumers aspire to and what they experience in reality (see Galster and Hesser 1981) • Housing satisfaction is a composite measure of residents’ assessment of a number of housing attributes • Evaluation of a particular environmental attribute depends on individual perception in relation to internal standards (Marans and Rogers 1975)

11. Housing Satisfaction Study • Generally considered important factors • Unit characteristics (objective adequacy, self assessment) • Public services (e.g., school quality, police protection) • Locational characteristics • Site characteristics (street layout, e.g., cul-de-sac) • Spatial relationship (e.g., proximity to other urban land uses or elements) • Social aspect of the housing environment (crime, neighborliness, etc) • Consumer characteristics (socioeconomic status, position in life cycle, etc)

12. Housing Satisfaction Study • Application of housing satisfaction study • Data: • Self conducted surveys • National survey (e.g., American Housing Survey) • Functional form • Linear regression (dependant variable takes the form of a global assessment of one’s housing or neighborhood) • Omission of variables

13. Example: A study of neighborhood satisfaction based on about 39,000 cases reported in the 2002 American Housing Survey (including 13 Metropolitan Statistical Areas).

14. Hedonic study vs. Satisfaction study • Individual-level analysis • Decompose a composite (global) measure of housing quality (housing price or housing satisfaction) • Infer the relative value of housing attributes held by consumers (implicit unit price or rating score impacts) • Only work for what is available in the market • Both require strong assumptions • Both involve methodological issues • Hedonic study provides easier interpretation • Satisfaction study provides broader consideration of housing environments

15. Application in Urban China Research • Hedonic study • Theoretic assumptions not met • Data availability • Satisfaction study • Conceptual understanding (what matters in Chinese society) • Survey design

16. Thank You