Inclusionary Zoning and California’s Foreclosure                Kristoffer Garcia     California State University Sacramen...
•Introduction•Previous Research•Model•Methodology•Data And Results•Conclusions                     2
Does enforcing county level inclusionary Zoning policy in California contribute toincreases in California foreclosures?   ...
Previous Research:Bento, A., Lowe, S., Knaap, G., &Chakraborty, A. (2009).    Examines the housing market effects of    in...
Economic Model:                                                  Dependent:                                      County le...
Methodology:˔   The liner regression’s data starts from January 1998 untilDecember 2008 and informs us of 142 observations...
Results:       Variable                           Coefficients [Std. Err.}   Foreclosures Per                            D...
Results Continued::           Variable                  Coefficients [Std. Err.}       Unemployment                       ...
Conclusion:Policy Effects and Foreclosures: -At the 5% confidence interval level, the Inclusionary zoning policies of Alam...
Conclusion (cont.):Economic Variables and foreclosures:-At the 5% level, a higher student population percentage that quali...
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  • Breakdown:
  • Main inclusion. Talk about sigs.
  • Policy Affects and Foreclosures: (->point) Housing characteristics and Foreclosures: -Although Bento, A., Lowe, S., Knaap, G., & Chakraborty, A. findings on housing market effects of inclusionary zoning conclude the price celling the local government mandates on counties and cities that impose inclusionary zoning causes market prices of higher valued single- family houses to increase while size of these single family houses decreases: (->point) - At the 1% confidence interval level the price celling's effects on the size of the higher valued market-priced single family houses in Alameda, Contra Costa, and San Francisco increases the change in the amount of per capita foreclosure occurrences compared to the 10 counties that did not have the policy compared to ten counties. Target Market Assumption Affects and Foreclosures: -I originally assumed the Hispanic and African American population are the target market of both inclusionary housing developers and subprime mortgage loans a higher total population percentage. Therefore, a higher population of Hispanic and African population in Alameda, Contra Costa, and San Francisco’s should increase the change of the amount of per capita foreclosures. Yet, (->point) -At the 10% confidence level a higher African American population indicates a decrease in the change on the amount of per capita foreclosure occurrences in an inclusionary zoned city. State implication: Also, this result implies inclusionary zoning decreases the need to for a low income African American to borrow a subprime prime loans. In addition, (->point)
  • Thank You.
  • Econ.145.final.presentation

    1. 1. Inclusionary Zoning and California’s Foreclosure Kristoffer Garcia California State University Sacramento 1
    2. 2. •Introduction•Previous Research•Model•Methodology•Data And Results•Conclusions 2
    3. 3. Does enforcing county level inclusionary Zoning policy in California contribute toincreases in California foreclosures? Bento, A., Lowe, S., Knaap, G., & Chakraborty, A. (2009) state that “the local government requires housing developers to sell a certain percentage of newly constructed housing units at below-market rates to lower income households without raising taxes or providing public funds”.Hypothesis:Factors:˔ Local governments that enforce their county to apply inclusionary zoning laws to housing developers should attractthe low to moderate income target market to purchases these cheaper houses.˔ The inclusionary zoning policy targets the same low-income minority market demographic as the subprime mortgageloan industry.˔ Inclusionary zoning counties will generate an incentive for their low-income target market to acquire subprime loansto purchase homes under inclusionary zoning.˔ the higher-fees and the higher-interest loan payback rate of subprime loans compensates for a greater risk of late ordelinquent home repayments (WILLIAMS, R., NESIBA, R., & MCCONNELL, E. 2005).Disregarding any concrete data on the subprime mortgage industry, the inclusionary zoningtarget buyer has the increased income constrained. The liability to payback these higher cost subprimeloans only after purchasing the now cheaper houses correlates to an increase of California foreclosuressince this low-income market will have to pay for both the higher-cost loan and the cheaper mortgage. 3
    4. 4. Previous Research:Bento, A., Lowe, S., Knaap, G., &Chakraborty, A. (2009). Examines the housing market effects of inclusionary zoning. Cityscape Effects: -Price of Single- Family houses increase -Size of Single Family Houses Decreases -Multifamily Housing production increases -Increases prices of the higher market priced higher valued homes in the county. 4
    5. 5. Economic Model: Dependent: County level foreclosures per capita Independents: (+) inclusionary Zoning Policy (+) Average Single Family Housing Price (+)Average Single Family Housing Size (+) County % of African American Population (+) County % of Hispanic Population (-) County % of White non-Hispanic (+)% of Children enrolled in Free or reduced price meal programs (+)Unemployment Rate (+)Poverty Rate % of total population (-)Personal Income per capita Equation: County Level foreclosures per capita=α+D(inclusionary Zoning Policy)+β1(Single Family Housing Price)+β2(Average Single Family Housing Size+ β3(County % of African American Population )+ B4(County % of Hispanic Population)+ β5(County % of White non-Hispanic origin)+ β6 (Percent of children enrolled in free or reduced price meal programs)+ β7 (Unemployment Rate)+ β8(Poverty Rate % of total population)+ β9(Personal Income per Capita)+time fixed effects. 5
    6. 6. Methodology:˔ The liner regression’s data starts from January 1998 untilDecember 2008 and informs us of 142 observations. Ourstudy compares the 13 California counties which impose ordo not enforce inclusionary zoning. Inclusionary Zoning No Zoning Policy Alameda Fresno ,Sacramento, Contra Costa Kern, LA, Orange, Placer, San Francisco Riverside, San Bernardino, San Diego, and San Joaquin 6
    7. 7. Results: Variable Coefficients [Std. Err.} Foreclosures Per Dependent Capita Inclusionary .5849991 ** [.3323612]Average Single Family .590494 *** Housing Size [.1036286] Avg. Single Family .256713 Housing Price [.2333386] A.American pop -.1391304 * [.0757321] Caucasian pop 1.504391** [.4694379] Hispanic pop -.0756789 [.1377398] free lunch program 1.112119** [.4646837]*significant at 10%, **significant at 5%, *** significant at 1% 7
    8. 8. Results Continued:: Variable Coefficients [Std. Err.} Unemployment .4817322** [1862959] Per capita income -1.289665* [.5179342] Constant -4.615673 [8.23372] Observations 142 Number of Counties 13 R-Squared .8312*significant at 10%, **significant at 5%, *** significant at 1% 8
    9. 9. Conclusion:Policy Effects and Foreclosures: -At the 5% confidence interval level, the Inclusionary zoning policies of Alameda, Contra Costa, and San Francisco countiesincreases the change on the amount of per capita foreclosure occurrences compared to the 10 counties n :(Fresno, Sacramento,Kern, LA, Orange, Placer, Riverside, San Bernardino, San Diego, and San Joaquin) that did not have the policy.Housing characteristics and Foreclosures:-At the 1% confidence interval level the price cellings effects on the size of the higher valued market-priced single family houses inAlameda, Contra Costa, and San Francisco increases the change in the amount of per capita foreclosure occurrences compared tothe 10 counties that did not have the policy.Target Market Assumption Effects and Foreclosures:-At the 10% confidence level a higher African American population indicates a decrease in the change on the amount of per capitaforeclosure occurrences in an inclusionary zoned city.-At the 5% confidence level counties that have a higher total population percentage of Caucasian causes the change on the amountof per capita foreclosure occurrences. Perhaps, the correlation between the increased amounts of foreclosures/capita and a highertotal population percentage of Caucasian within a county are from the housing producers passing on “the increase in productioncosts” (Bento, A., Lowe, S., Knaap, G., & Chakraborty, A. (2009) gained from the price celling set on below market price homesincreases these units production cost. This increased cost decreases the housing developers producer surplus and revenues.Developers compensate these loses by increasing the prices on higher valued Single- Family houses which less financially strainedCaucasian population consume but also foreclose on because of the now higher prices. 9
    10. 10. Conclusion (cont.):Economic Variables and foreclosures:-At the 5% level, a higher student population percentage that qualify for various county school districts governmentfunded free lunch program increases the of the amount of per capita foreclosure.-At the 5% level, higher unemployment rates causes increases in the change of foreclosures per capita.-At the 10% level, higher personal income per capita levels decreases the change of foreclosures per capita.Final Conclusion: Inclusionary Zoning policies contribute to increases in California’s foreclosures. 10
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