SHARE
Una versión más actualizada de este artículo está disponible como parte del capítulo 6 del libro Perspectivas urbanas: Temas críticos en políticas de suelo de América Latina.
Hoy en día la mayoría de los países de América Latina son más urbanos que rurales y están tratando de desarrollar sus economías como partes integrales del mercado global. Este proceso introduce profundos cambios culturales y espaciales tales como mayor segregación y conflictos sobre el uso del suelo urbano.
Es sabida la necesidad de fortalecer la conciencia ciudadana sobre la liberalización de los mercados y la pérdida de protagonismo del Estado en los esquemas de economía y planificación. Este cambio en el papel del Estado —de “proveedor” a “facilitador”— crea un vacío en las necesidades sociales urbanas. Los participantes sugirieron tres abordajes para poder mejorar la gestión del suelo urbano y la igualdad social de manera simultánea.
Primero que todo, utilizar herramientas básicas para establecer y apoyar los sistemas de información urbana: un mecanismo de monitoreo con capacidad para identificar datos de agentes y transacciones, incluidos los precios del suelo; conocimiento de los “ciclos de vida” de las zonas urbanas; y modelos de predicción que permitan establecer la relación entre las economías municipales y nacionales y el mercado de bienes raíces.
En segundo lugar, instituir políticas urbanas que equilibren los mecanismos de mercado existentes, que suelen ser contradictorios. Por ejemplo, es difícil liberalizar los mercados y al mismo tiempo imponer límites en la expansión urbana cuando se intenta ofrecer suministros de suelo adecuados para satisfacer las necesidades de la población pobre trabajadora.
Tercero, reconocer y dar apoyo a las acciones positivas de grupos comunitarios y organizaciones no gubernamentales que se propongan combatir los patrones de segregación de clases, como también a los intentos municipales de utilizar instrumentos como reservas territoriales, mecanismos de financiamiento progresivos y mejoras en los procedimientos administrativos y fiscales.
Uno de los mayores problemas de la planificación territorial en América Latina es encontrar el “borde” de la ciudad, especialmente cuando la tenencia y ocupación del suelo responden a la necesidad social, más que a la ley. Entre las formas de propiedad urbana que funcionan fuera de los reglamentos comerciales está la tierra mantenida bajo el sistema de ejido , que ocupa más del 50 por ciento del territorio mexicano y forma parte de las zonas metropolitanas más importantes. El ejido dificulta el crecimiento natural del mercado de bienes raíces y propicia la expansión de mercados secundarios (informales) descontrolados.
Estos y otros temas afines concentraron la discusión en una reunión que tuvo lugar en México en el mes de abril. En ella, peritos y personalidades académicas compartieron sus puntos de vista sobre los procesos que afectan el orden territorial urbano y los instrumentos disponibles y necesarios para poder lograr una intervención pública eficaz, conducente al logro de objetivos de igualdad social y planificación territorial. Si bien los participantes del seminario manifestaron sus inquietudes por el efecto a largo plazo de la globalización en América Latina, también reconocieron que el escenario de acción, al menos durante los años venideros, será a nivel municipal más que a nivel nacional.
Sobre los autores
Luis Fernando Alvarez es investigador principal del Centro de Estudios Metropolitanos, Centro Universitario de Arte, Arquitectura y Diseño de la Universidad de Guadalajara, México.
William J. Siembieda es profesor de planificación de la Escuela de Arquitectura y Planificación de la Universidad de Nuevo México. El seminario sobre temas de suelo urbano y reserva territorial fue copatrocinado por el Instituto Lincoln y por el Centro de Estudios Metropolitanos en la Universidad de Guadalajara.
SHARE
I am pleased to report that the Lincoln Institute has signed an agreement of understanding with the Ministry of Land and Resources in the People’s Republic of China (PRC) to work together on researching and teaching about land and tax policies. Many places in the world face fundamental problems in land allocation and land taxation, but it is difficult to imagine a place and time where the resources of the Lincoln Institute could be more influential and could help more people than in China during the early twenty-first century.
Land and tax policy makers in China are faced with enormous challenges as a result of the extraordinary urbanization of the past two decades. The number of established cities in China grew from 182 in 1982 to 324 in 1985, and reached 666 by 1996, and the average urban population grew by 227 percent between 1957 and 1995. Some cities grew by 200 percent from 1985 to 1995, and the urbanized area of Beijing doubled from 1985 to 1992. However, the extent of urbanization in the future will dwarf that of the recent past. Based on forecasts of population growth and migration, China must provide enough urban land and infrastructure to accommodate more than 450 million persons over the next 20 years. If all of the additional urban population were put in new cities of 10 million persons each, China would need to develop and finance 45 such cities.
China initiated fundamental and revolutionary land use reforms during the mid-1980s. The first reforms established privately held land use rights. The second set of reforms included multiple elements, such as land banking, land trusts, land readjustments, and development of land markets in both urban and rural areas. We believe that the Institute can make a real difference in assisting these reform measures by sponsoring education and training for government officials, supporting research and publications by U.S. and Chinese scholars, and facilitating more in-depth interactions through workshops and conferences.
Over the past two years the Institute has led two training programs in Beijing and participated in meetings between Chinese officials and scholars and Institute board members, faculty and staff. The Institute also sponsored several sessions on land and housing markets in the PRC at the First World Planning Congress in Shanghai in 2001. We anticipate several more training and exchange programs this year, but we believe this is still just the beginning of an expanded effort by the Institute to have a positive impact on land and tax policy in the world’s most populous country. In this issue, Institute faculty associates Chengri Ding and Gerrit Knaap examine some of the recent reforms and current trends in urban land policy in China.
SHARE
La información sobre los valores de las casas es fundamental para los investigadores y formadores de políticas interesados en el establecimiento de políticas públicas bien informadas en temas tales como tributación e inversiones de infraestructura. Los métodos de ventas repetidas, como el índice de S&P/Case-Shiller, que se usan comúnmente en los Estados Unidos para estudiar la dinámica de los precios de las casas, no son prácticos en los países en vías de desarrollo, donde los precios declarados de las transacciones de las casas frecuentemente son menores a su valor real, por razones diversas.
Los propietarios de casas también necesitan una referencia confiable para medir el valor de una casa para ayudar en la toma de decisiones personales tales como la jubilación (Lusardi y Mitchell, 2007), el consumo (Campbell y Cocco, 2007), los ahorros (Juster et al. 2005) y la composición de la deuda de la unidad familiar (Disney, Bridges y Gathergood 2006). como para dictar políticas públicas. Se ha demostrado que el valor de una casa es una variable clave en las decisiones de un propietario, por ejemplo en materia de jubilación
Hemos evaluado la fiabilidad de los datos de encuestas de hogares sobre las estimaciones del valor de las casas en México efectuadas por sus propietarios. Argumentamos que, en promedio, las estimaciones de los propietarios de corto plazo tienden a ser razonablemente objetivas y precisas. Las estimaciones de los propietarios sobre el precio de mercado de una propiedad, obtenidas por medio de estas encuestas, pueden ser la manera más conveniente y confiable de efectuar el seguimiento de los precios de las casas bajo ciertas circunstancias.
La valuación de las casas en los Estados Unidos
Todas las encuestas de hogares principales en los Estados Unidos – el censo decenal, el Estudio de Panel sobre Dinámicas de Ingresos (Panel Study of Income Dynamics) la Encuesta de Hogares de los Estados Unidos (American Housing Survey) y la Encuesta de Finanzas del Consumidor (Survey of Consumer Finances)hacen preguntas tales como: “¿Cuánto vale esta propiedad? Es decir, ¿por cuánto cree usted que se vendería esta propiedad si se pusiera a la venta?” El argumento principal a favor de usar este tipo de pregunta sobre la valuación de una casa es que es fácil de recolectar los datos. Pero también es crucial evaluar la fiabilidad de estas valuaciones autoestimadas de las casas.
En Kish y Lansing (1954), se les pidió a propietarios en ciudades estadounidenses que estimaran el valor de mercado de sus casas, y las mismas estimaciones fueron efectuadas más tarde por valuadores profesionales. La conclusión principal fue que el sesgo promedio en las estimaciones de la gente oscilaba alrededor de cero. Es decir, si bien algunas estimaciones individuales podían ser bastante distintas del valor asignado por el valuador, los errores parecían cancelarse al hacer el promedio. Esta fue una conclusión importante para justificar el uso de esta pregunta en grandes encuestas. Cuando los investigadores se concentraron en distintos subgrupos, descubrieron que las estimaciones más precisas del valor de la casa eran las efectuadas por propietarios recientes. No aumentaba la exactitud si el encuestado era jefe de hogar o tenía más educación, ni si el valuador había podido entrar a la propiedad para hacer la valuación.
Usando los mismos métodos y datos similares, Kain y Quigley (1972) confirmaron que los errores en gran medida se compensaban, pero que estaban correlacionados con el nivel socioeconómico del encuestado. Una mayor educación estaba asociada a un menor sesgo positivo en la estimación del propietario. Esta investigación también trató de determinar por qué algunos encuestados no respondían a esta pregunta, y descubrió que aquellos con mayor nivel de ingresos y educación pero menor tiempo de tenencia tenían una mayor probabilidad de proporcionar una estimación del valor de su casa.
Dado que la estimación ideal del precio de mercado de una casa es el precio de venta más reciente, algunos estudios han comparado los datos de venta de transacciones recientes con las estimaciones de los propietarios. Goodman e Ittner (1992), por ejemplo, compararon las estimaciones de los propietarios con los precios de venta subsiguientes de la misma propiedad usando la Encuesta de Hogares de los Estados Unidos de 1985 y 1987. Encontraron que el propietario promedio en los EE.UU. sobreestima el valor de su casa en un 6 por ciento por encima del precio de venta real, y que el error absoluto promedio es de alrededor del 14 por ciento. El error no está relacionado en su mayor parte con las características del propietario, de la casa o del mercado local.
Otro enfoque consiste en comparar las valuaciones tributarias con las autoestimaciones de los propietarios (David, 1968). El problema obvio de usar las valuaciones tributarias es que éstas pueden no estar siempre actualizadas para reflejar las condiciones actuales del mercado, causando una impresión fallida del valor de la vivienda. En general, estos estudios concluyeron que, en promedio, los propietarios en los E.U.A. tienden a sobreestimar el valor de sus casas en alrededor del 5 por ciento. Esta sobrevaluación no está relacionada con las características del propietario o de la casa, sino con la duración de la tenencia de la casa. Llegamos entonces a la conclusión de que se pueden usar las encuestas en forma fiable para obtener, a muy bajo costo, estimaciones razonables de la valuación de las casas en los mercados de vivienda de los EE.UU.
Mercados de vivienda en países en vías de desarrollo
En los países desarrollados, el acceso al suelo ocurre principalmente por medio de compras formales, mientras que en los países en vías de desarrollo es bastante común que una porción sustancial del crecimiento urbano ocurra en terrenos ocupados informalmente, especialmente por parte de los grupos de bajos ingresos. Los habitantes se pueden organizar para invadir tierras estatales, áreas protegidas y hasta propiedades privadas. Cuando los tribunales hayan establecido la ilegalidad de tales actos, muchas veces ya habrá algún político a quien le conviene brindar protección y servicios a los invasores a cambio de votos y respaldo político, en vez de desalojarlos de los suelos ocupados ilegalmente.
En algunos casos, los gobiernos locales expropian la tierra para después transferirla a sus electores. Aquellos que adquieren su propiedad en estas condiciones tienen más dificultad para determinar el valor monetario de la propiedad, ya que no pagaron inicialmente por ella. Y en ocasiones, la propiedad no se puede vender fácilmente, ya que no tiene un título válido.
Otra característica distintiva de los mercados de vivienda en los países en vías de desarrollo es la gran proporción de casas construidas por sus propietarios. La preponderancia de viviendas autoconstruidas, en vez de ser erigidas por compañías de construcción especializadas, ocurre porque el sistema financiero está subdesarrollado y los préstamos hipotecarios no existen o son muy caros. Las familias adquieren una vivienda construyéndola con sus propias manos durante un período prolongado de tiempo.
La falta de desarrollo de los mercados hipotecarios puede obligar a las familias a usar métodos de construcción ineficientes, porque la casa se construye por etapas, usando los materiales de construcción que ellos puedan solventar y tengan a su disposición en ese momento. Estas restricciones pueden dar lugar a costos de construcción innecesariamente altos, así como también a prácticas de construcción no reguladas e ineficientes. Si la gente estima el valor de su casa como la suma de los gastos incurridos para construirla, aquellos propietarios que se encuentran en zonas donde no haya acceso a los préstamos hipotecarios probablemente avalúen sus casas autoconstruidas a un valor más alto.
La autoconstrucción también puede influir el acceso a información sobre el valor actual de mercado de dicha propiedad. Los proyectos inmobiliarios desarrollados por compañías de construcción generalmente tienen un mayor grado de homogeneidad, de manera que las ventas en el barrio generan información sobre el valor actual de las propiedades circundantes. Cuando una casa es autoconstruida, este canal de información desaparece, porque las casas construidas de esta manera no representan adecuadamente el valor de otras casas en el barrio.
Jiménez (1982) ha proporcionado uno de los pocos estudios sobre los valores de las casas en un país en vías de desarrollo. Usando datos de un barrio pobre en las Filipinas, encontró que los valores medios de las estimaciones respectivas del propietario y del valuador no se pueden distinguir estadísticamente. Su muestra de las Filipinas se compara bien con los resultados de Kain y Quigley (1972) para St. Louis, Missouri, en cuanto a las diferencias de las valuaciones promedio. No obstante, para estimaciones individuales, Jiménez encontró que el valor absoluto promedio de las diferencias entre la valuación del propietario y la del valuador es aproximadamente un 55 por ciento de la valuación media, mientras que la cifra comparable para Kain y Quigley es de aproximadamente el 20 por ciento.
Encuestas de hogares y datos de valuación
Nuestro análisis usa datos de una encuesta de hogares y valuaciones de las mismas casas efectuadas por un valuador que también es corredor inmobiliario. La encuesta, realizada entre mediados de febrero y mediados de marzo de 2006, incluyó aproximadamente 1.200 viviendas en las afueras de la ciudad de Acayucán, en el estado de Veracruz, en el centro de México. Las casas de la muestra se encontraban en los distritos más pobres de la ciudad, donde las calles no estaban pavimentadas y muchas casas no contaban con servicios vitales de agua y alcantarillado. La casa promedio de la muestra tenía 2,5 cuartos. Sólo el 63 por ciento de las viviendas tenían un baño interno, y el 60 por ciento tenían un techo de placas metálicas, amianto u hojas de palma. Además, el 12 por ciento de los propietarios reportaron que no tenían un título de propiedad.
Las familias entrevistadas fueron propietarios-ocupantes, no inquilinos, y la mayoría vivía en viviendas pequeñas de un solo piso, en lotes bien demarcados. Una de las preguntas de la encuesta fue: “¿ Por aproximadamente cuánto dinero cree usted que se vendería esta casa actualmente?” El propietario promedio estimó que el valor de su casa era $19.948, mientras que la valuación promedio fue de sólo $12.123 (en dólares estadounidenses de 2006). La diferencia de las medianas, si bien mucho menor ($1.545) y la diferencia del logaritmo de las medias también son significativas en ambos casos. (Para una descripción detallada de la encuesta, véase González-Navarro y Quintana-Domeque [2007, 2008].)
La otra fuente de datos son las valuaciones de las casas efectuadas por un valuador profesional y agente de bienes raíces. Al hacer que una sola persona realice todas las valuaciones, se reducen los riesgos de decisiones subjetivas y el uso de distintas prácticas de valuación. El valuador visitó una de cada dos casas donde sus residentes habían sido entrevistados, y las valuaciones se realizaron a más tardar dos meses después de la encuesta de hogares, reduciendo así la preocupación sobre la posibilidad de inflación o volatilidad en los precios de las casas.
En las encuestas completadas, la tasa de respuesta para la pregunta sobre la estimación del propietario del valor de la casa fue de aproximadamente el 74 por ciento. Una de las ventajas importantes del procedimiento en dos etapas del estudio es la posibilidad de investigar las valuaciones de las casas del 26 por ciento de los encuestados que no respondieron a la pregunta sobre el valor de su casa. Por lo tanto, a diferencia de cualquier estudio anterior, podemos investigar si la falta de respuesta a la pregunta por parte del propietario está relacionada con el valor de la casa medido por el valuador.
Encontramos evidencia de que la valuación promedio de una casa es igual tanto para los encuestados que proporcionaron una estimación del valor de su casa como para los que no lo hicieron. Además, la edad, sexo, ser o no jefe de familia, y poseer o no un título y tenencia de la propiedad no estuvieron correlacionados con la probabilidad de respuesta. Esto sugiere que los propietarios que no proporcionaron una estimación del valor de su casa son un subconjunto aleatorio de la muestra. Esta es una conclusión importante si se van a utilizar las valuaciones de los propietarios en otros estudios para estimar los precios promedio de las casas en países en vías de desarrollo.
Suponemos que el valor determinado por el valuador es muy cercano al valor de mercado de la casa. También creemos que es razonable interpretar que la discrepancia entre los valores de las casas obtenidos de los propietarios y los del valuador se debe a percepciones equivocadas sobre el valor de mercado por parte del propietario. Hay varias razones que justifican dicha interpretación. Primero, el valuador hace una estimación más precisa que los propietarios sobre el tamaño del lote (uno de los determinantes más importantes del valor de una casa). Segundo, el valuador parece inferir otras características de la vivienda con precisión. Tercero, es más probable que el valuador tenga conocimiento de los factores de mercado que influyen en la valuación de las casas en la ciudad.
La relación entre las estimaciones del propietario y el valuador
La tabla 1 (ver anexo) muestra el grado de error promedio y la falta de precisión o exactitud en las estimaciones de los propietarios para varias submuestras. Como en estudios previos, los resultados se muestran para distintas medidas de sesgo (la diferencia entre el valor de la casa estimado por el propietario y el valuador, y la diferencia porcentual con respecto a la estimación del valuador) e inexactitud (la diferencia absoluta y la diferencia porcentual absoluta).
Considerando a todos los propietarios de la muestra, la diferencia promedio entre la estimación del propietario y la valuación es de alrededor de $7.800, indicando que los propietarios tienden a sobreestimar el valor de sus casas. La diferencia porcentual de las medias es el 124% de la valuación. En cuanto a la falta de exactitud o precisión, la diferencia absoluta de las medias es aproximadamente de $13,500, reflejando cuán distintas son las estimaciones del valuador de las del propietario. En promedio, los propietarios de la muestra tienen una expectativa demasiado alta del valor de su casa.
Estos resultados se contraponen a la evidencia disponible para los Estados Unidos y las Filipinas. Tanto Kain y Quigley (1972) en St.Louis y Jiménez (1982) en las Filipinas reportan una diferencia porcentual de las medias de menos del 0, 5 por ciento. En términos de precisión, encontramos también que los resultados son muy distintos. En nuestra muestra, la diferencia porcentual absoluta se estima en más del 150 por ciento, mientras que en las Filipinas es de aproximadamente el 55 por ciento y en St. Louis el 20 por ciento. Por otro lado, los resultados de error e inexactitud para propietarios con tenencia reciente (menos de dos años) son estadísticamente cercanos a cero. El mismo resultado se obtiene para el error porcentual de la media, y el error porcentual absoluto se reduce en más del 50 por ciento.
Como se mencionó anteriormente, una de las diferencias entre los mercados de viviendas desarrollados y subdesarrollados es la falta de construcción de viviendas por firmas especializadas y la falta de información acerca de la distribución de los precios de las viviendas en estos últimos. La última columna de la tabla 1 identifica el conjunto de casas construidas, en vez de autoconstruidas. Para este subgrupo, el error medio y el error porcentual medio no son estadísticamente distintos de cero, mientras que el error porcentual absoluto (33 por ciento) es el menor de los cuatro grupos. Esto puede sugerir que los propietarios de casas autoconstruidas proporcionan estimaciones con un sesgo positivo porque la autoconstrucción gradual a lo largo del tiempo es más cara que comprar una casa ya construida.
Determinantes del sesgo individual y la inexactitud
Los resultados sugieren que el sesgo e inexactitud en las estimaciones de los propietarios se pueden atribuir a la tenencia a largo plazo. En González-Navarro y Quintana-Domeque (2009), demostramos que ni la discrepancia en la estimación del tamaño del lote ni las características socioeconómicas del encuestado parece estar correlacionadas con el error o la falta de precisión en las estimaciones de los propietarios. Sólo la tenencia está correlacionada significativamente con el sesgo y la falta de precisión.
Dados estos resultados, estimamos a continuación los valores promedio de las casas a nivel de distritos censales para estudiar el desempeño del valor autoestimado en función de la longitud de la tenencia. Como argumentamos anteriormente, el valor autoestimado por los propietarios de tenencia breve proporciona una estimación más exacta del valor promedio de las casas. Una cuestión importante al incluir solamente a los propietarios recientes es que el tamaño de la muestra es chico. La tabla 2 (ver anexo) muestra que las dos medidas de sesgo (la diferencia de las medias y la diferencia porcentual de las medias) para propietarios de tenencia breve proporcionan una estimación menos distorsionada del valor medio de las casas, como también las medidas de diferencia absoluta de las medias y la diferencia porcentual absoluta de las medias.
Si bien hemos hecho todo el esfuerzo posible por obtener precios de mercado para confirmar las valuaciones profesionales, esta búsqueda resultó esquiva. Este hecho resalta la importancia de evaluar la fiabilidad de los valores autoestimados de las casas en los países en vías de desarrollo, donde los valores de mercado estimados por los propietarios parecen ser la medida más accesible del valor de las casas.
Conclusión
En nuestra muestra, el sesgo de valuación asociado con una tenencia más prolongada es positivo, confirmando los resultados de varios estudios en los EE.UU. efectuados con casas recientemente vendidas. Nuestra conclusión principal es que el sesgo debido al período de tenencia es potencialmente mucho mayor en el contexto de un país en vías de desarrollo. Los propietarios de tenencia prolongada sobreestiman, en su mayoría, el valor de sus casas, con un error porcentual absoluto de la media del orden del 150 por ciento. Por otro lado, las familias con una tenencia de dos años o menos realizan estimaciones razonablemente exactas y objetivas del valor de sus casas. Un grupo de casas similares construidas por una firma de construcción especializada muestra un sesgo nulo y estimaciones mucho más precisas que las de otros subgrupos.
Encontramos que la falta de respuesta a la pregunta sobre el valor de la casa no está correlacionada con su valuación y otras características demográficas del propietario. Esto sugiere que se pueden obtener estimaciones objetivas del valor promedio de grupos de casas por medio de encuestas de hogares. Además, el sesgo y la inexactitud no tienen una correlación pronunciada con las características socioeconómicas, como los ingresos familiares o el nivel de educación del encuestado.
En resumen, los resultados de este estudio advierten contra el uso de las estimaciones de los propietarios para hacer un análisis de conducta individual, pero sugieren que estas estimaciones se pueden usar como una aproximación razonable de los valores medios de grupos de casas. Si el objetivo es estimar el valor medio de la casa, las respuestas de los propietarios con un periodo corto de residencia se podrían usar exitosamente en encuestas futuras realizadas en países en vías de desarrollo.
Sobre los autores
Marco González-Navarro es Robert Wood Johnson Scholar de Investigación sobre Políticas de Salud en la Universidad de California, Berkeley. Recibió su doctorado en economía de la Universidad de Princeton.
Climent Quintana-Domeque es profesor asistente del Departamento de Economía de la Universidad de Alicante, España. Recibió su doctorado en economía de la Universidad de Princeton.
Referencias
Campbell, J.Y. and Cocco, J.F. 2007. How do house prices affect consumption? Evidence from micro data. Journal of Monetary Economics 54(3): 591–621.
David, E. L. 1968. The use of assessed data to approximate sales values of recreational Property. Land Economics 44(1): 127–129.
Disney, R., Bridges, S. and Gathergood, J. 2006. Housing wealth and household indebtness: Is there a household ‘Financial Accelerator’? Manuscrito no publicado. Nottingham, UK: University of Nottingham.
Gonzalez-Navarro, M. and Quintana-Domeque, C. 2007. Description of the Acayucan Standards of Living Survey. Unpublished manuscript. Princeton, NJ: Princeton University.
———. 2009. The reliability of self–reported home values in a developing country context. Journal of Housing Economics 18(4): 311–324.
Goodman, J.L. and Ittner, J.B. 1992. The accuracy of homeowners’ estimates of house value. Journal of Housing Economics 2(4): 339–357.
Jimenez, E. (1982) The value of squatter dwellings in developing countries. Economic Development and Cultural Change 30(4): 739–752.
Juster, F.T., Lupton, J.P., Smith, J.P., and Stafford F. 2005. The decline in household saving and the wealth effect. Review of Economics and Statistics 87(4): 20–27.
Kain, J.F. and Quigley, J.M. (1972) Note on owner’s estimate of housing value. Journal of the American Statistical Association 67(340): 803–806.
Kish, L. and Lansing, J.B. 1954. Response errors in estimating the value of homes. Journal of the American Statistical Association 49(267): 520–538.
Lusardi, A. and Mitchell, O.S. 2007. Baby boomers retirement security: The role of planning, financial literacy and housing wealth. Journal of Monetary Economics 54(1): 205–224.
SHARE
A pesar de la creciente popularidad de la agricultura urbana, muchas granjas urbanas siguen enfrentando el desafío de la inseguridad respecto de la posesión del suelo y de políticas públicas demasiado restrictivas. Algunos investigadores y responsables de diseñar políticas han identificado la necesidad de un marco actualizado para este movimiento que apoye a los granjeros urbanos en temas relacionados con las reglamentaciones sobre el uso del suelo, zonificación e impuestos a la propiedad. Los fideicomisos de suelo comunitarios (CLT, por sus siglas en inglés) se dedican a apoyar este tipo de estructura, ya que su abordaje del uso del suelo tiene que ver con ejercer un control a nivel local que fomente el activismo y la participación comunitaria, a la vez que responden a las condiciones del mercado y las necesidades de los barrios en constante evolución.
El estado de la agricultura urbana
El término “agricultura urbana” se refiere tanto a las actividades comerciales como no comerciales que se llevan a cabo dentro de un centro urbano o cerca del mismo con el fin de elaborar productos alimenticios o no para su utilización en un área urbana (Mougeot 2000). Aunque las granjas urbanas y las huertas comunitarias son, por lo general, la cara visible de la agricultura urbana, los espacios de cultivo a pequeña escala y los huertos que se encuentran en los jardines traseros de las casas también representan una parte significativa de la producción.
La agricultura urbana ha permitido a las comunidades obtener diferentes tipos de beneficios ambientales, económicos y sociales, tales como una mejor alimentación, una mayor seguridad en el abastecimiento de alimentos, la restauración ecológica, la creación de espacios abiertos y oportunidades de educación y capacitación en habilidades para el trabajo (Bellows, Brown y Smit 2004; Kaufman y Bailkey 2000; Smit, Ratta y Nasr 1996). Las granjas urbanas tienen además la capacidad única de unir diferentes tipos de poblaciones, generar un capital social y promover la atribución de responsabilidades mediante la construcción de la comunidad (Staeheli y otros 2002). En las ciudades tradicionales (es decir, aquellos antiguos centros industriales que han sufrido el impacto de la pérdida continua de empleo y población y los consiguientes cambios económicos, sociales y políticos), la agricultura urbana se ha utilizado en gran manera como una herramienta de desarrollo tanto provisional como permanente a fin de fortalecer la cohesión social y catalizar el progreso en barrios que carecen de inversión. El proceso de convertir lotes vacantes y abandonados en espacios para cultivo puede resultar una estrategia relativamente rápida y económica que produzca un gran impacto visible y mejore la seguridad pública.
A raíz de los mencionados beneficios en diversas áreas, la agricultura urbana ha gozado de un renacimiento como movimiento social. En los últimos años, algunas ciudades y municipios han actualizado sus políticas públicas con el fin de apoyar en mayor medida las prácticas agrícolas urbanas. No obstante, este movimiento presenta sus propios desafíos, tales como la preocupación en cuanto a la seguridad ambiental y la seguridad en la posesión del suelo (Brown y otros 2002). En particular, la inseguridad en cuanto al suelo es el motivo de preocupación más citado como el mayor obstáculo para la implementación y sustentabilidad de las granjas urbanas (Lawson 2004; Yuen 2012). Según una encuesta nacional realizada en 1998 a más de 6.000 granjas urbanas, el 99,9 por ciento de los horticultores consideraban el tema de la posesión del suelo como un desafío y, a la vez, como un elemento vital para el éxito futuro del movimiento (ACGA 1998).
En estos casos, la inseguridad en cuanto al suelo surge cuando el costo de los terrenos a precio de mercado excede los ingresos derivados de las actividades agrícolas. Básicamente, la mano escondida del mercado hace presión sobre la asignación de terrenos según el mejor y óptimo uso que se le pueda dar. Debido a dicha conceptualización dominante, los planificadores y responsables de diseñar políticas históricamente han considerado la agricultura urbana como una medida provisional para mantener un lugar en actividad hasta que se puedan desarrollar usos mejores y óptimos. Sin embargo, los académicos señalan que las granjas urbanas pueden producir muchos efectos secundarios positivos relacionados con la salud pública y el bienestar de la comunidad, y que resulta difícil monetizar dichos beneficios (Schmelzkopf 1995). Las valuaciones de cambio tradicionales relacionadas con el suelo casi nunca reflejan los aportes que realizan las huertas comunitarias a la educación sobre alimentación saludable y al bienestar físico de los residentes. Esta desconexión entre el valor social y los valores de mercado ha sido el impulso para intervenciones tanto públicas como privadas.
En general, los gobiernos municipales responden comprando parcelas de terrenos agrícolas urbanos, aislándolas así de las fuerzas especulativas del mercado y evitando su inclusión en los registros tributarios. Aunque este abordaje del sector público ha sido sumamente importante, a veces no logra otorgar una seguridad a largo plazo, especialmente cuando los cambios administrativos en los gobiernos municipales dan como resultado modificaciones en las prioridades y estrategias, tal como ocurrió en 1999 cuando el alcalde de la Ciudad de Nueva York, Rudy Giuliani, propuso subastar 850 huertas comunitarias de toda la ciudad. Por lo tanto, los investigadores se han enfocado en la necesidad de buscar estrategias alternativas que puedan complementar las medidas llevadas a cabo por el sector público a fin de apoyar la seguridad del suelo para la agricultura urbana.
————————
Recuadro 1: Encuesta 2012 de CLT en los Estados Unidos de América
En el otoño de 2012, la Red Nacional de Fideicomisos de Suelo Comunitarios (NCLTN), junto con el Lincoln Institute of Land Policy, encargó realizar un estudio de proyectos comerciales y agrícolas urbanos llevados a cabo por CLT en los EE.UU. (Rosenberg y Yuen 2012). Mediante este estudio, se analizó el papel que representan los CLT al implementar proyectos no residenciales y se evaluaron los beneficios y desafíos derivados de dichos proyectos. Los investigadores distribuyeron una encuesta por Internet a las 224 organizaciones que aparecen en la base de datos de la NCLTN: 56 CLT (25 por ciento) respondieron el cuestionario y 37 CLT informaron que se dedicaban a actividades agrícolas. Se seleccionaron 12 CLT para recopilar información más detallada, lo cual mostró una variedad de proyectos con diferentes niveles de éxito en distintos lugares. Para levantar los datos se utilizó un enfoque de estudio de casos, mediante la recopilación de documentos organizacionales y fuentes secundarias, así como también entrevistas al personal de las CLT. El documento de trabajo definitivo tiene su sustento en otro recurso conformado por un listado de proyectos que resalta los proyectos y organizaciones involucradas en el estudio (Yuen y Rosenberg 2012).
En el presente artículo tomamos en cuenta dicha investigación a fin de analizar los beneficios, desafíos y consideraciones derivadas de las actividades agrícolas urbanas llevadas a cabo por las CLT. Además, se examina de qué manera dichas intervenciones son capaces de apoyar las actividades integrales de desarrollo comunitario, particularmente en las ciudades tradicionales.
————————
Los CLT como marco para la agricultura urbana
Un CLT es una sociedad anónima comunitaria sin fines de lucro cuyos miembros provienen del mismo lugar, posee un directorio elegido democráticamente y tiene un compromiso con fines benéficos basado en el uso y la administración del suelo a favor de la población local. Los CLT, por lo general, conservan la propiedad permanente del suelo y lo arriendan a personas u organizaciones que tienen la propiedad sobre las mejoras del suelo, tales como viviendas, edificios comerciales e instalaciones agrícolas o recreativas. El modelo del CLT ofrece una forma de conservar la propiedad del suelo administrada por y para la comunidad, por lo que el mejor u óptimo uso de la propiedad puede permanecer definido y controlado por la comunidad y puede adaptarse a las condiciones cambiantes.
Aunque en las últimas décadas los CLT se han enfocado en el desarrollo y la administración de viviendas accesibles económicamente, el movimiento se originó en respuesta a ciertos problemas relacionados con los terrenos con fines agrícolas en el área rural de Georgia durante la década de 1960. Otras influencias aun anteriores son los kibutz en Israel, los barrios Gramdan en la India y las ciudades jardín de Ebenezer Howard (Davis 2010). La solidez del modelo del CLT se fundamenta en su capacidad de equilibrar el control del suelo a nivel local y el desarrollo administrado a largo plazo que trata las necesidades de la comunidad siempre cambiantes. Así, los CLT se encuentran en la mejor posición para abordar diferentes usos del suelo mediante estrategias de desarrollo integrales. Las ciudades tradicionales son, tal vez, las más aptas para la participación de un CLT, ya que la disponibilidad generalizada de suelo vacante ha dado como resultado un floreciente movimiento agrícola urbano, aunque el énfasis sea menor respecto a la seguridad del suelo a largo plazo.
Nuestra investigación encontró que los CLT había dado apoyo a los proyectos de agricultura urbana de tres formas diferentes: garantizando el acceso al suelo para fines agrícolas, proporcionando apoyo programático y participando directamente en la producción de alimentos.
Cómo garantizar el acceso al suelo para fines agrícolas
Las competencias fundamentales de los CLT se prestan mejor a la tarea de acceder a espacios con fines agrícolas. Una de las misiones centrales de los CLT es garantizar el acceso al suelo para oportunidades de desarrollo comunitario. Con el fin de llevar a cabo esta tarea, los CLT han utilizado diversos tipos de posesión del suelo, tales como la propiedad en pleno dominio, el arrendamiento de terrenos, las servidumbres y las restricciones en los títulos de propiedad (tabla 1). Estos tipos de acuerdo no se excluyen mutuamente: las organizaciones pueden emplear diferentes técnicas con el fin de garantizar el acceso al suelo tanto dentro de un mismo proyecto agrícola como para diferentes proyectos.
Propiedad en pleno dominio
La propiedad en pleno dominio permite al CLT conservar la mayor cantidad de derechos de propiedad y brinda un alto nivel de seguridad en cuanto al suelo, siempre que cumpla con todos los pagos de hipotecas y obligaciones fiscales. Por ejemplo, Dudley Neighbors Incorporated (DNI), un CLT de Roxbury, Massachusetts, llevó a cabo el redesarrollo de un sitio contaminado donde anteriormente funcionaba un taller mecánico de automóviles para transformarlo en el vivero Dudley de 930 metros cuadrados, que funciona como una granja comercial y, a la vez, como un espacio de cultivo comunitario. DNI obtuvo la seguridad del terreno mediante la propiedad en pleno dominio, y arrienda la estructura del vivero a una tasa nominal a una entidad alimentaria sin fines de lucro que administra la totalidad de la programación y el mantenimiento agrícola. Harry Smith, director de sustentabilidad y desarrollo económico de DNI, señala: “El cultivo de alimentos es algo totalmente diferente, por lo que no intentamos encargarnos de esa tarea”.
Arrendamiento del terreno
Aunque la propiedad en pleno dominio es una herramienta simple y con un nivel de seguridad alto, por lo general resulta demasiado costosa para que los CLT puedan comprar suelo urbano directamente para la producción de alimentos. En vista de este desafío, algunos CLT han utilizado el arrendamiento de terrenos para tener acceso al suelo con fines agrícolas. Por ejemplo, el CLT de Southside (SCLT) posee un contrato de alquiler por 10 años con el estado de Rhode Island sobre una granja de 8 hectáreas en Cranston. A su vez, el CLT de Southside administra la granja en calidad de arrendatario principal y subarrienda lotes a siete granjeros noveles a tasas nominales. Debido a que el arriendo del terreno es accesible y seguro, se generan oportunidades para que los jóvenes granjeros puedan comenzar sus incipientes negocios y participar en el sistema de producción de alimentos local. Un contrato de arrendamiento de terrenos sólido que presente rigurosos estándares de rendimiento y condiciones de renovación puede proporcionar una seguridad igual o mayor que una propiedad en pleno dominio. No obstante, los arrendamientos de terrenos a largo plazo pueden resultar difíciles de elaborar e implementar, especialmente cuando la entidad que posee el título de propiedad tiene la intención de establecer una flexibilidad a largo plazo.
Servidumbres de conservación
Los CLT también garantizan el acceso al suelo mediante servidumbres de conservación o restricciones voluntarias que limitan de forma permanente el uso que se puede dar al suelo. Por lo general, el CLT posee una servidumbre donada por un propietario particular. Este propietario particular conserva el título de propiedad y hasta puede vender los terrenos a un tercero sin comprometer la seguridad del suelo, ya que la servidumbre de conservación garantiza el acceso a largo plazo al espacio con fines agrícolas. Las servidumbres también pueden reducir la carga administrativa del propietario, ya que el receptor de la servidumbre por lo general brinda servicios de administración del suelo como parte del intercambio. Esta estrategia puede beneficiar económicamente a los propietarios, quienes reciben beneficios fiscales tanto a nivel federal como municipal por donar servidumbres de conservación. Aunque las servidumbres pueden efectivamente garantizar el acceso al espacio con fines agrícolas, el costo legal puede llegar a ser muy alto, especialmente en lo que respecta a las parcelas más pequeñas.
Restricciones en el tÍtulo de propiedad
Las restricciones en el título de propiedad pueden limitar efectivamente los usos del suelo y, por lo general, están relacionadas con fuentes de financiamiento específicas. Aunque una restricción en el título de propiedad puede garantizar que el suelo se reserve para un uso específico, no necesariamente ofrece al granjero o agricultor particular una posesión segura. Además, las restricciones en el título de propiedad son efectivas sólo cuando todas las partes y agentes externos deciden poner en vigencia el contrato. Cada uno de los diferentes acuerdos de posesión del suelo posee ventajas y desventajas relativas, por lo que la mejor manera de utilizarlos es en el contexto de un proyecto específico. Por ejemplo, en Wisconsin, el CLT del área de Madison tuvo que otorgar una restricción en el título de propiedad a la ciudad de Madison como condición para recibir fondos destinados al desarrollo de uso mixto Troy Gardens. La restricción en el título de propiedad se estableció sobre una parte del terreno para limitar su uso a los proyectos agrícolas y de conservación. Sin embargo, si el CLT no cumpliera con los términos de la restricción en el título de propiedad, esto desencadenaría la inmediata devolución de la totalidad del subsidio otorgado por la ciudad.
Apoyo mediante programas
Debido a que la tarea de garantizar el acceso al suelo con fines agrícolas puede presentar muchos desafíos, tal vez no sea el emprendimiento adecuado para cualquier organización o comunidad. Algunos CLT han apoyado las tareas agrícolas urbanas de otras maneras, tales como la gestión de programas, la asistencia técnica y otros servicios de índole agrícola. Por ejemplo, en Georgia, el Athens Land Trust es un fideicomiso de suelo con una doble misión —viviendas y espacio abierto— que se ha involucrado en la agricultura urbana exclusivamente a través de un programa de apoyo. El Athens Land Trust decidió aceptar este rol debido a los altos costos de propiedad asociados a las políticas sobre el impuesto a la propiedad vigentes en Georgia, según las cuales el suelo de un CLT se valúa al valor de mercado sin restricciones. El Athens Land Trust se asocia con propietarios del sector público y privado a fin de proporcionar apoyo para proyectos agrícolas a nivel local. Por ejemplo, el personal del Athens Land Trust trabajó junto con la congregación de la iglesia bautista Hill Chapel a fin de diseñar una huerta comunitaria en terrenos de propiedad de la iglesia, y brindó servicios de apoyo tales como prueba y cultivo del suelo, organización del cronograma de trabajo y entrega de materiales sobre plantas y realización de talleres educativos sobre horticultura.
Producción agrícola
Finalmente, algunos CLT han participado en la producción agrícola mediante el cultivo directo y activo del suelo. Por ejemplo, el CLT de Southside administra una granja comercial de 3 kilómetros cuadrados en Providence, Rhode Island, donde se cultivan y venden verduras directamente a los restaurantes de la zona. Muchos CLT también apoyan la producción agrícola de forma indirecta, entregando propiedades residenciales a personas que cultivan productos alimenticios en las huertas de sus patios traseros. De esta manera, sin saberlo, muchos CLT han apoyado la agricultura urbana durante años, simplemente por haber proporcionado un acceso económico y seguro a terrenos cultivables en las ciudades. Algunos grupos, como DNI, diseñan específicamente lotes de propiedad residencial de mayores dimensiones a fin de ofrecer la oportunidad de plantar huertas urbanas en los patios traseros. Harry Smith, de DNI, explica: “A medida que realizábamos nuestra planificación comunitaria, la gente dejó muy claro que quería ver espacios abiertos y que se tuviera en cuenta la calidad de vida de los residentes. Estamos tratando de incorporar [la agricultura] a las propias viviendas”. De esta manera, la producción agrícola del CLT también puede abarcar características innovadoras de diseño, tales como huertas, agroforestería y otros conceptos derivados de la permacultura que se incorporan de manera intencional y sistemática en el plan de desarrollo.
Beneficios de la agricultura urbana sustentada por los CLT
En última instancia, según nuestro estudio, se han observado beneficios mutuos entre la agricultura urbana y los CLT. Las granjas urbanas aumentan el valor de los CLT, ya que ayudan a las organizaciones a expandir su visión de desarrollo hacia necesidades y prioridades más integrales de los barrios. Todas las comunidades tienen diferentes necesidades además de la necesidad de viviendas accesibles, por lo que los proyectos agrícolas pueden generar conexiones a otros problemas clave, como la seguridad en el abastecimiento de alimentos, la educación en temas de salud, la recuperación de terrenos vacantes y la seguridad de los barrios. Los proyectos agrícolas, además, pueden considerarse atracciones del barrio, lo que puede aumentar la demanda de propiedades o viviendas de CLT de los alrededores en el mercado convencional. Por ejemplo, Church Community Housing Corporation (CCHC) desarrolló el proyecto de granjas de Sandywoods en Tiverton, Rhode Island, que incluye diferentes tipos de programas de viviendas, agricultura y artísticos. Al principio, CCHC comercializó el desarrollo solamente como una comunidad artística, pero los posibles residentes expresaron un fuerte interés en las huertas comunitarias y en la preservación de terrenos agrícolas. En consecuencia, CCHC renombró el proyecto como un desarrollo “artístico y agrícola”. Brigid Ryan, gerente principal de proyectos de CCHC, explica: “La agricultura ha despegado mucho más de lo que hubiéramos pensado. La huerta realmente atrae a algunas personas [a las unidades de vivienda para arrendar]. Nunca pensaron que sus hijos serían capaces de cultivar sus propios alimentos”.
En el vivero Dudley de DNI también se observaron conexiones beneficiosas entre la agricultura y la vivienda. Harry Smith, de DNI, señala: “El proyecto realmente ayuda a la comercialización de nuestras viviendas. Las personas no sólo obtienen una vivienda sino también una comunidad que está basada en alimentos frescos cultivados en el lugar”.
Desafíos de la agricultura urbana sustentada por los CLT
A pesar de los beneficios, los CLT que implementan proyectos agrícolas todavía enfrentan muchos desafíos. En particular, la rentabilidad económica continúa siendo una de las principales luchas en todo el sector de la agricultura urbana, ya que los ingresos generados por las ventas de productos son relativamente modestos, aun en los establecimientos comerciales. El CLT de Southside cubre solamente el 8 por ciento de sus gastos operativos a través de la venta comercial de sus productos a restaurantes locales. Gracias a otras fuentes de ingresos, tales como las cuotas de membresía y las ventas de plantines, los ingresos del CLT sólo llegan a cubrir el 20 por ciento de sus gastos. Los CLT siguen dependiendo en gran manera de los subsidios para poder compensar la diferencia entre costos y beneficios.
Un segundo posible desafío tiene que ver con que algunos proyectos requieren un alto nivel de conocimientos agrícolas, por lo que pueden poner a prueba la capacidad y la experiencia del personal del CLT. Incluso Athens Land Trust, que posee un personal con experiencia en la preservación de suelos agrícolas y técnicas de cultivo, reconoció las dificultades que tuvo al principio para aprender los detalles específicos derivados de los códigos de zonificación municipal relacionados con la agricultura comercial. Como resultado, algunos proyectos principales del CLT tuvieron que demorarse hasta que se encontraran soluciones de zonificación que funcionaran. El riesgo es aun mayor para aquellos proyectos agrícolas comerciales que requieren un gran nivel de comprensión de los sistemas de procesamiento y distribución y de las condiciones del mercado local. Por ejemplo, en la granja Sandywoods, CCHC había planificado inicialmente utilizar el suelo de cultivo preservado para la alimentación del ganado. Sin embargo, finalmente se enteraron de que el único matadero de ganado de Rhode Island había cerrado. El matadero más cercano se encontraba cruzando la frontera, en Massachusetts, por lo que el procesamiento de carne resultaba demasiado costoso. Brigid Ryan, gerente principal de proyectos de CCHC, señala: “Cuando uno debe aprender acerca de estos sectores especializados, resulta muy importante conseguir socios que sepan de lo que están hablando”. Debido a los desafíos y posibles inconvenientes, los CLT deben considerar las siguientes cuestiones a fin de mejorar la factibilidad y sustentabilidad de los proyectos agrícolas.
Participación de la comunidad
En su calidad de organización basada en la comunidad, el impulso de un CLT debería estar determinado siempre por las necesidades y preocupaciones del barrio. No obstante, resulta particularmente vital que existan sólidos procesos de planificación comunitaria para que la agricultura urbana sea exitosa, y en estas planificaciones los CLT por lo general dependen de los residentes y socios locales para llevar a cabo la producción agrícola. Harry Smith, de DNI, hace hincapié en este punto: “Diría que el trabajo de un CLT no consiste sólo en administrar las propiedades y obtener más terrenos para el fideicomiso, sino también en involucrar realmente a la comunidad en lo que esta desea además de la vivienda, ya sean emprendimientos comerciales, un vivero o terrenos de cultivo”. Además, la participación de un CLT en proyectos agrícolas puede catalizar mayores medidas de organización de la comunidad y ayudar a los residentes a hacer presión para exigir más políticas públicas de apoyo.
Evaluación de la organización
Los CLT pueden apoyar los proyectos no residenciales de diferentes maneras, y las organizaciones deberían evaluar sistemáticamente sus capacidades internas, así como también a las partes interesadas que podrían llegar a ser posibles socios en los proyectos. De esta manera, los CLT pueden generar colaboraciones complementarias y desarrollar aún más los activos y capacidades existentes en la comunidad. Si el CLT carece de experiencia en temas de cultivo, bien puede apoyar la agricultura urbana en otras formas a fin de alinearse en mayor medida con los socios locales, por ejemplo, garantizando el acceso al suelo, ayudando a desarrollar los códigos de zonificación agrícola urbana o actuando en calidad de agente fiscal en lo relacionado con los subsidios.
Gestión de riesgos
Los CLT deberían minimizar su riesgo económico en los proyectos agrícolas, especialmente en vista de los modestos ingresos y la futura incertidumbre en cuanto a la obtención de subsidios para la producción de alimentos. En respuesta a esto, algunos CLT concentran desde un inicio los gastos previstos de capital relacionados con los proyectos agrícolas. De manera similar, los CLT pueden gestionar la exposición al riesgo evitando el financiamiento de la deuda de los proyectos agrícolas. Varios CLT consideran que cubrir el servicio de deuda representa un desafío demasiado grande debido a los modestos ingresos derivados de la venta de productos y a las tasas de arrendamiento nominales que los CLT en general cobran por los terrenos agrícolas. Por ejemplo, DNI logró adquirir terrenos y construir el vivero Dudley sin incurrir en una deuda a largo plazo, a la vez que su condición de entidad exenta del impuesto municipal a la propiedad le permitió tener costos de posesión mínimos. La estructura financiera de bajo riesgo que se generó a raíz de esto resultó muy importante cuando DNI no pudo conseguir a su primer arrendatario del vivero. Aunque con posterioridad el vivero estuvo vacante durante aproximadamente cinco años, DNI fue capaz de absorber la pérdida derivada de este inesperado período en que la propiedad estuvo vacante.
Conclusión
Aunque el movimiento de agricultura urbana ha experimentado un gran impulso en los últimos años, aún necesita estrategias coherentes a largo plazo para proteger los espacios de cultivo de las fuerzas especulativas del mercado. La relación fundamental entre el suelo y la comunidad está en juego. Dentro del movimiento de agricultura urbana, la inseguridad en cuanto al suelo resalta la urgente necesidad de reconceptualizar requerimientos de las comunidades tanto presentes como futuras. Además, la noción del “mayor y mejor uso” debe ampliarse con objeto de incluir los resultados no económicos y las diferentes formas de participación comunitaria efectiva. Los CLT son entidades ideales para tratar estos problemas críticos y, al hacerlo, pueden lograr que los procesos de desarrollo económico sean más inclusivos, justos y capaces de responder a las condiciones locales siempre cambiantes.
Sobre el autor
Jeffrey Yuen, M.S., es un investigador, profesional y entusiasta en temas relacionados con los CLT y es miembro del directorio del Fideicomiso de Suelo Comunitario de Essex. Se desempeña como gerente de evaluación de impactos en New Jersey Community Capital, en New Brunswick, Nueva Jersey.
Recursos
ACGA (American Community Gardening Association). 1998. National Community Gardening Survey: 1996. http://www.communitygarden.org/docs/learn/cgsurvey96part1.pdf
Bellows, A., K. Brown y J. Smit. 2004. “Health Benefits of Urban Agriculture.” Community Food Security Coalition’s North American Initiative on Urban Agriculture. http://community-wealth.org/content/health-benefits-urban-agriculture
Brown, K., M. Bailkey, A. Meares-Cohen, J. Nasr y P. Mann (editores). 2002. “Urban Agriculture and Community Food Security in the United States: Farming from the City Center to the Urban Fringe.” Urban Agriculture Committee of the Community Food Security Coalition.
Davis, J. E. 2010. “Origins and Evolution of the Community Land Trust in the United States.” En The Community Land Trust Reader, editado por J. E. Davis, 3–47. Cambridge, MA: Lincoln Institute of Land Policy.
Kaufman, J. y M. Bailkey. 2000. “Farming Inside Cities: Entrepreneurial Urban Agriculture in the United States.” Documento de trabajo. Cambridge, MA: Lincoln Institute of Land Policy.
Lawson, L. 2004. “The Planner in the Garden: A Historical View of the Relationship of Planning to Community Garden Programs.” Journal of Planning History 3(2): 151–176.
Mougeot, L. 2000. “Urban Agriculture: Definition, Presence, Potentials and Risks.” En Growing Cities, Growing Food, Urban Agriculture on the Policy Agenda, editado por N. Bakker, M. Dubbeling, S. Guendel, U. Sabel Koschella y H. de Zeeuw. DSE, Feldafing.
Rosenberg, G. y J. Yuen. 2012. “Beyond Housing: Urban Agriculture and Commercial Development by Community Land Trusts.” Documento de trabajo. Cambridge, MA: Lincoln Institute of Land Policy.
Schmelzkopf, K. 1995. “Urban Community Gardens as Contested Space.” Geographical Review 85(3): 364–381.
Smit, J., A. Ratta y J. Nasr. 1996. Urban Agriculture: Food, Jobs and Sustainable Cities. Nueva York: United Nations Development Programme. http://jacsmit.com/book.html
Staeheli, L., D. Mitchell y K. Gibson. 2002. “Conflicting Rights to the City in New York’s Community Gardens.” Geojournal 58(2–3): 197–205.
Yuen, J. 2012. “Hybrid Vigor: An Analysis of Land Tenure Arrangements in Addressing Land Security for Urban Community Gardens.” Masters’ Thesis, Columbia University. http://academiccommons.columbia.edu/catalog/ac:147036
Yuen, J. y G. Rosenberg. 2012. National Community Land Trust Network. Non-Residential Project Directory. National Community Land Trust Network. http://www.cltnetwork.org/doc_library/FINAL%20Non-residential%20project%20directory%204-26-13.pdf
SHARE
The Lincoln Institute has supported the authors’ work on property taxation in South Africa for several years, and in February 2002 the Institute published Property Taxes in South Africa: Challenges in the Post-Apartheid Era. Edited by Bell and Bowman, the book presents major portions of their own work, together with chapters by several of their colleagues in the U.S. and in South Africa. This article provides an overview of seminars on property tax issues conducted by Bell and Bowman in South Africa in March 2002.
The end of apartheid in South Africa nearly a decade ago presented new opportunities and challenges to every aspect of national life, including fiscal issues. The government faced the task of extending the property tax to previously untaxed areas and adapting it to provide services through a set of radically restructured local governments. The final reorganization of local government took effect in December 2000, and the new governments now must develop comprehensive property tax (rates) policies.
Several key pieces of apartheid-era legislation had established the spatial basis for racial separation:
These policies greatly complicated efforts to amalgamate former white and black local authorities (WLAs and BLAs), with important implications for property taxation. Specifically, for local governments, the legacy of apartheid includes:
Post-Apartheid Local Government Structure
The dismantling of apartheid began in the mid-1980s and was essentially complete by the early 1990s. At the end of 1993, the Local Government Transition Act (LGTA) was signed by then-President de Klerk and, symbolically, by Nelson Mandela, leader of the African National Congress (ANC). The LGTA provided for short-, medium- and long-term transformation of local governments to create nonracial self-government. It created two-tier local governments in metropolitan areas, with powers and responsibilities shared between a geographically larger unit and two or more smaller units within the same area. The Municipal Structures Act of 1998, providing for single-tier metropolitan government, was implemented after the local elections of December 2000 as part of a general and final redemarcation of local governments that reduced the number of authorities from approximately 845 to less than 300.
Amalgamation of municipalities brought new areas into the property tax base, including former BLAs, bantustans and their associated rural R293 towns, but the residents of these newly incorporated areas had never before paid property taxes. Thus, it was necessary to develop the information and administrative infrastructure needed to value properties, determine tax liabilities, distribute tax bills to those responsible, and collect the taxes due, all in an equitable manner. Moreover, the new tax system had to overcome the psychology of payment boycotts, sometimes characterized as a “culture of nonpayment,” an important resistance technique used against the apartheid government.
Combining formerly taxed areas with different valuation rates or systems into a single municipality produces inconsistencies within the property tax roll of the amalgamated area, multiplying inequities among property owners with different effective tax rates. Both those new to the tax and those who historically have paid property taxes often question whether their tax shares are equitable and how the resulting revenue is being spent. In some instances, tax boycotts have occurred in former WLAs.
National Property Tax Policy
Although property taxation remains a local tax in South Africa, the 1996 Constitution authorizes central government regulation of property taxation. A national Property Rates Bill, scheduled for adoption in 2002, will replace current provincial property tax laws. Each locality now must adopt an explicit and comprehensive property rates policy.
Our seminars took place in this context of national legislation, municipal consolidation and municipal property rates policies. We collaborated with local institutions of higher education: Port Elizabeth Technikon in Nelson Mandela Metropolitan Municipality and the University of North West in Mafikeng Local Municipality. Seminar participants included current and former elected city councilors, newly enfranchised and long-time non-elected officials, and students and faculty of the educational institutions.
Nelson Mandela Municipality is one of South Africa’s six metropolitan municipal governments, the only local government within its geographic area. Its population and business center is the former city of Port Elizabeth. Principal property tax concerns raised at the seminar included: (1) unifying the tax rolls of the various jurisdictions making up the metropolitan area, since their valuation dates range over a number of years; (2) bringing former black local authority (BLA) areas into the property tax base; (3) deciding on the appropriate way to deal with rural (agricultural) land, previously not taxed but now part of the municipal area; and (4) accomplishing these things in a manner that is sensitive to the special circumstances of those with very low incomes.
Mafikeng, the capital of the North West Province, lies within the Mmbatho District Municipality in the former Bophuthatswana homeland near the Botswana border. Some property tax concerns raised at the Mafikeng seminar were the same as in Nelson Mandela Municipality. In addition, Mafikeng is wrestling with incorporating tribal (traditional authority) areas and the black urban agglomerations (R293 towns) of the former bantustan. Tribal areas present two special problems: property ownership is communal, not private; and the traditional authority structure remains in place, even though these areas now are included within municipal borders, creating a dual authority structure that further complicates amalgamation.
Key Property Taxation Themes
Policy Framework
New national legislation requires each local government to produce a property rates policy to address such issues as whether to include all real properties in the tax base; whether to apply uniform or differential rates to the many categories of property included in the tax base; and what form of property relief should be given, and to whom. If the property tax is to be a viable local revenue source, local rates policies must be guided by the following principles:
These fundamental characteristics of a property tax system provide a framework for restructuring property taxes in South Africa, with tradeoffs made through an open and transparent political process at the local level.
Monitoring
The property tax base is fair market value. Because most properties do not sell in a market transaction each year, however, estimating market value is the task of trained assessment professionals. Differences in location, depreciation and other characteristics make valuation partly an art, not strictly a scientific or technical endeavor. Uniformity relative to market value may not always result, even though it is required and the assessors follow the procedures intended to achieve that result. Thus, a system for monitoring valuation outcomes is needed, which may include three dimensions of assessment quality:
Formal assessment/sales ratio studies have not been done in South Africa, but we calculated simple ratios for several cities. The results in Table 1 indicate that assessment uniformity generally needs to be improved, since coefficients of dispersion across the case study cities are typically high and the price-related differentials are generally substantially above one.
Targeting Tax Relief
Although property taxation is a tax on value, it is paid out of current income, and thus may place an unacceptable burden on property owners with low incomes. Property tax relief is any reduction in tax liability. Indirect relief results from changes that take pressure off the property tax: reduced expenditures or increased revenue from alternative sources. Alternatively, direct relief comes from a change in the calculation of property tax liability.
Direct relief was the focus of our studies and the seminar discussions. In South Africa direct residential property tax relief typically is a uniform percentage credit, termed a rebate, which generally is 20 percent or 25 percent of gross property tax liability. The rebate approach has two limitations. First, most of the tax relief goes to those with the most expensive properties. Second, low-income property owners are still required to pay most of their property tax liability, which still could be burdensome relative to income.
While an income-based circuit breaker is our preferred approach for targeting tax relief to those in need, it would be extremely difficult to administer in South Africa because income information is not readily available, in part because of the extensive informal economy. An alternative way to target property tax relief to those most in need is to exempt a fixed amount of the base from taxation.
Table 2 illustrates the effects of moving from a 25 percent rebate to a R20,000 exemption (US$1,740). Under the partial exemption alternative, the lowest valued properties, including those hardest to value at this time, are removed from paying taxes, and net taxes are reduced on all properties up to about R100,000 (US$8,700). The aggregate cost of property tax relief under this approach is substantially reduced because each property receives the same exemption. Durban and Johannesburg now are experimenting with the partial exemption approach to property tax relief.
Dealing with Previously Untaxed Areas
As a result of the local government restructuring in December 2000, South Africa now has local governments throughout country. Three types of areas previously outside the property tax now are to be brought into the tax: former BLAs and R293 townships, agricultural areas and tribal areas. In the former BLAs and R293 townships property is being transferred to private ownership and these areas must be surveyed by the national Surveyor General to establish individual property boundaries and identifications necessary to administer the property tax. Different localities are at different stages in this process.
Property taxes were levied on rural agricultural lands in the past, but these lands have not been in the property tax base since the late 1980s. Bringing them into the tax base now poses two problems. The first is developing the property record information necessary for tax administration. The second is the question of how taxes on such properties should relate to taxes levied in the urban portions of a municipality, as farmers often provide themselves and their workers with services typically associated with local government. One possibility is use-value assessment of agricultural land, an approach endorsed by a national commission that reviewed the taxation of rural lands. Alternatively, differential rates for different categories of property are allowed under current provincial property tax laws and the draft national Property Rates Bill. If there is to be differentiation in effective tax rates, imposing a lower rate on market value assessments provides greater transparency and understanding of the tax and should be part of the local government rates policy.
Bringing tribal areas into the tax base presents another set of issues. First, given communal land tenure systems existing in these traditional authority areas, how does one establish ownership, a necessary condition for the application of property tax based on the principle of private property? Second, because there is no land market per se, how are estimates of market value to be made? Finally, given the two competing governance structures that now exist in tribal areas, how does one make the payment of a property tax acceptable to residents who did not previously pay the tax? These issues are clearly the most intractable ones that must be addressed in the newest round of local government reform in South Africa.
Conclusion
The property tax has been an important part of local finance in South Africa for centuries and is likely to play an increasingly important role in the future, as newly amalgamated local governments wrestle with addressing the legacies of apartheid and the requirements of new national property tax legislation. There is no single right answer to many of the perplexing questions surrounding the design and implementation of a local property tax, but it will continue to evolve to meet changing circumstances and needs.
Michael E. Bell is president of MEB Associates, Inc., in McHenry, Maryland. John H. Bowman is professor of economics at Virginia Commonwealth University in Richmond.
References
Bell, Michael E. and John H. Bowman. 2002. Property Taxes in South Africa: Challenges in the Post-Apartheid Era. Cambridge, MA: Lincoln Institute of Land Policy.
SHARE
The property tax in Indiana has long generated considerable public policy debate, centering on the methods prescribed by the state to determine property values. Most states use some form of market value as the assessment standard, but Indiana relies on “true tax value.” Indiana law defines this as “the value determined under the rules of the State Board of Tax Commissioners,” and it declares that “true tax value does not mean fair market value.”
A landmark decision by the state Supreme Court in December 1998 ignited new debate over Indiana’s property tax system. The Court ruled that the tables used in the 1995 assessment manual lacked “meaningful reference to property wealth,” did not contain “objectively verifiable data,” and violated the state constitution. Although the legal opinion contained language suggesting approval of the use of market-derived data, the Court fell short of mandating a system based strictly on market value.
Almost two years have passed since this ruling, but minimal progress has been made in implementing a more equitable and uniform assessment system. Policy makers have focused almost exclusively on the projected tax shifts, especially those to homeowners, under market-derived valuation methods, and have all but ignored the underlying inequities that plague Indiana’s assessment system.
This article reviews the essential features of Indiana’s property tax and assessment systems, describes recent reform efforts, and identifies critical reform issues, apart from the tax shifts, that need to be addressed.
Property Tax and Assessment Systems
Property Tax Revenues. In 1999, the property tax raised more than $4.6 billion, nearly all of it generated locally and used for local services, especially K-12 public education. The property tax is the largest revenue source in Indiana, generating more revenue in 1999 than federal funds ($3.8 billion), individual income taxes ($3.7 billion), and sales and use taxes ($3.4 billion). Together, these four revenue sources account for nearly 80 percent of total state and local revenue (see Figure 1).
Nearly 65 percent of the total property tax levy in 1999 was paid by the business community, including commercial, industrial, utility, and agricultural property (see Figure 2). Personal property accounts for about one-half of the total business property tax burden. Although Indiana’s constitution prohibits unequal property taxation, this relatively high business share demonstrates a de facto classification system that allocates a majority of the property tax burden to non-voting entities.
Local Administration. The primary assessing jurisdiction in Indiana is the township. Each of the state’s 1,008 townships elects either a full- or part-time assessor, depending on population; nearly 85 percent of these assessors are part-time. County assessors are elected in each of the state’s 92 counties. As a general rule, the county assessor has a greater role when townships have more part-time assessors, because the county assessor reviews both personal property and real estate assessments.
State Administration. The State Board of Tax Commissioners (Tax Board), the first property tax commission of its kind in the nation, is primarily responsible for promulgating assessment rules and regulations for both real and personal property. Additionally, the Tax Board hears property tax appeals, approves local government budgets, provides assessor training, and maintains a comprehensive local government database.
Assessment Standards. Real and personal property are assessed at one-third of true tax value (TTV). The TTV of improved real property is based on a cost approach, but neither the replacement costs nor the depreciation schedules are market derived. In fact, when compared to the market, Indiana’s TTVs vary widely, not only between property classes (i.e., residential, business, utility and agricultural) but within classes as well.
The TTV of personal property is based on original acquisition cost, but, like the TTV of real property, relies on depreciation schedules that bear little relationship to the market. Most business assets receive accelerated depreciation of 40 to 60 percent in the first few years. However, older assets are subject to a relatively high residual value of 30 percent of original cost. Business inventory also is based on its original cost and is subject to the same floor, but it receives a 35 percent assessment deduction.
Indiana law provides that the TTV of land is to be based on market value, but recent studies have found that land assessments are significantly less than market value. Residential land values are roughly 40 percent of market value. The TTV of farmland is based on a use value of $495 per acre, adjusted for soil productivity, resulting in an assessment that is also well below market value.
Assessment Cycle. Indiana employs two different assessment cycles. Personal property is self-assessed annually, while real property reassessment is both infrequent and irregular. The last general reassessment of real property took effect in March 1995. The previous reassessment occurred in 1989, and reassessments generally took effect every ten years before then. The next general reassessment of real property has been delayed from March 1999 until at least March 2002.
Assessment Reform
Major state reform efforts, whether in welfare programs, school funding or tax policy, tend be driven by either fiscal distress or judicial mandates, but the political process dictates the speed of reform. This same pattern holds true for tax reform to achieve a more equitable and uniform assessment system in Indiana, as policy makers have been slow to respond to judicial mandates.
Judicial Efforts. The Indiana Supreme Court’s 1998 decision in State Board of Tax Commissioners v. Town of St. John is widely considered to be the most significant judicial decision on taxation in the state’s history. The Supreme Court affirmed the state Tax Court’s decision that the 1995 real property assessment manual violated the state constitution’s requirement that the Indiana General Assembly provide for “. . . a uniform and equal rate of property assessment and taxation.”
The Supreme Court found these mandates of uniformity and equality were not met because the manual’s cost schedules were arbitrary, did not reflect actual construction costs, and were not based on “objectively verifiable” data. Unlike the Tax Court, however, the Supreme Court did not mandate a strict market value system. Rather, it ruled that any departures from market value must result in assessments that are “substantially uniform and equal based on property wealth.”
Because executive and legislative policy makers have been slow to respond to this mandate, the Tax Court has become increasingly assertive in the pursuit of an equitable assessment system. Recently, the Tax Court established certain dates for both the adoption (June 2001) and implementation (March 2002) of constitutional assessment regulations, required the Tax Board to submit monthly progress reports, and announced that an independent reassessment commissioner would be appointed if the Tax Board’s efforts were “deficient in any meaningful way.”
Executive Efforts. To carry out its duty to ensure uniformity and equality of property assessment and taxation, the Indiana General Assembly has delegated the development and oversight of the state’s assessment system to the State Tax Board, an executive agency under the governor. This agency has the unenviable task of creating a new assessment system that will likely cause considerable shifts in tax burdens. Delays have further politicized this process, and assessment reform and tax burden shifts have become the focus of the November 2000 general election.
The Tax Board has taken steps to comply with the Supreme Court decision. The Board’s 1999 proposed real property assessment manual incorporated market-derived cost tables for all property classes. Residential depreciation schedules also were based on the market, and the base value of agricultural land was increased from $495 to $1,050 an acre.
Unfortunately, other actions by the Tax Board and the inaction of the executive branch may have offset these improvements. For example, the proposed manual provided a residential assessment reduction, or shelter allowance. The Tax Board argued that basic shelter is not property wealth, since other assets cannot substitute for shelter. A shelter allowance was calculated for each county, ranging in value between $16,000 and $22,686, to be deducted from residential property assessments. This unique valuation method would reduce the predicted residential tax shift from 33 to 7 percent and could be considered a form of classification. Viewing this shift as unacceptable, the governor did not approve the 1999 proposed real estate manual, illustrating the highly politicized nature of assessment reform.
Legislative Efforts. Anticipating a major court decision, the 1997 Indiana General Assembly enacted legislation that many considered the first step toward significant assessment reform. It increased assessor training requirements, improved the local and state appeals process, and required the state to establish level of assessment and uniformity standards and to conduct equalization studies. Again, these improvements may have been offset by other legislative initiatives. The 1997 legislation allows township assessors to establish land values, an authority that previously rested with county land commissions. Current data indicates that these township land values are far from market values, and it is unlikely that the large number of part-time township assessors can establish more accurate land values in the future.
The recently enacted equalization legislation is also problematic. Most states equalize assessments in the first year that reassessment takes effect, to provide immediate mitigation for unequal assessment. Current Indiana law delays equalization for at least two years following the effective date of reassessment.
Conclusion
It comes as no surprise that projected property tax shifts have become the focal point of both assessment reform efforts and the 2000 general election. The highly politicized debate over “acceptable” tax burden shifts has distracted policy makers from addressing reform of assessment regulations. While market-derived assessment manuals represent a significant step, this alone will not result in a more uniform and equitable assessment system. Policy makers must also consider the following issues:
1. Taxpayer equity cannot be measured by interclass tax shifts at the county level alone. Assessment reform will produce dramatic intraclass and intracounty tax shifts, but these shifts have been discussed only as they relate to residential property. Yet, current data indicates that equally significant shifts will occur within other property classes, especially business property.
2. The current administrative structure of the state’s assessment system may not be compatible with an equitable and uniform assessment system. Restructuring the Tax Board could help insulate it from the political consequences of its oversight function. At the local level, policy makers should consider streamlining the roles of local assessors and identifying alternative assessment jurisdiction models based on population, parcel counts, and/or assessed value.
3. Adoption and enforcement of strict equalization standards may be the most significant step in the reform process.
4. The Indiana assessment community should take further steps to increase the level of assessor training and expand assessor qualification requirements. Policy makers also should consider appointment of local assessors by the county executive.
5. Indiana land assessments have been and continue to be well below market value. This underlying problem must be rectified through assessor training, more diligent state oversight, and implementation of the equalization process.
These issues must be addressed in order to remedy the inequities currently plaguing Indiana’s property tax and assessment systems.
____________
Frank Kelly and Jeff Wuensch are cofounders of the Nexus Group, an Indiana-based research firm specializing in property taxation. Kelly is also assistant professor of economics at Butler University and Indiana University; he previously served as the senior tax analyst for the Indiana State Tax Board. Wuensch previously worked as director of tax review at the Indiana State Tax Board and at the Indiana Fiscal Policy Institute. Kelly, Wuensch and Thomas Hamilton, assistant professor of real estate in the Department of Finance at the University of St. Thomas in St. Paul, Minnesota, are joint recipients of a David C. Lincoln Fellowship in Land Value Taxation from the Lincoln Institute. This article is based on their study of Indiana’s property tax system as part of their Fellowship project.
Total state and local revenue: Table/Chart 1 Sources are the Indiana State Tax Board and Indiana State Budget Agency Who pays the property tax: Table/Chart 2 Source is the Indiana State Tax Board.
SHARE
Numerous convergent trends motivated 40 academics and practitioners from 15 countries to meet at the Lincoln Institute in July 1998 to discuss recent land market reforms. First, the recognition that the world’s population is becoming increasingly urban and so the quantity of land converted to urban use is expected to rise significantly. Second, evidence that a major proportion of the world’s poorest households now lives in urban areas (e.g., 80 percent in Latin America). Third, the perceived sea change in the role of government shifting away from intervention and regulation toward more selective urban management. During the three-day workshop, participants presented papers and discussed the rationale behind recent legal and institutional reforms, the nature of the transition from customary or informal to formal markets, evidence for improved land market efficiency, and access to land for the poor.
Legal and Institutional Reform
Several participants made the case for institutional reform of land markets in different ways. Steve Mayo (Lincoln Institute) drew conceptual and empirical links between the performance of property markets and the macro economy. He noted that poorly functioning land markets influence wealth creation and mobility rates which, coupled with particular finance conditions, could aggravate macro-economic instability. Drawing data from the Housing Indicators Program he showed that the prices of raw and serviced land tended to converge with higher land prices, indicating larger land development multipliers at lower prices. He also noted a relationship between the price elasticity of the housing supply and the policy environment.
Although there is a perception that reforms toward ‘enabling’ policy environments are now widespread in developing and transition economies, Alain Durand-Lasserve (National Center for Scientific Research, France) observed the rarity of explicit reference to ‘land market reform’ in political statements in Africa. Indeed, he argued that the ideological underpinning for freer land markets was more advanced than the practice of establishing the prerequisites for effective and unitary markets. In practice, a number of papers indicated competing political agendas, legal ambiguity and diversity of progress in the reform process.
“The law can be reformed, history cannot,” said Patrick McAuslan (Birkbeck College, London) in discussing the role of the law as a necessary basis for effective land market reform. He described the evolution of the recent Land Act of Uganda, which seeks to establish a land market based on individual ownership. He commended the government for dovetailing the reform process with extensive public debate, but noted that drafts of the Act set up new contradictions in a century-long history of competing land relations between freehold, customary tenure and nationalized public lands. His paper outlined a series of ‘time-bombs’ left by colonial administrations and aggravated by post-independence governments, only some of which are addressed by the new legislation.
The inconsistent nature of reform appears to be particularly acute for the transition economies of Eastern Europe and Southern Africa. In Eastern Europe, the legacies of communism have led to inappropriate land uses and the assignment of non-monetary values to property. Legal changes toward land privatization, however, have been slow. Tom Reiner (University of Pennsylvania) argued that despite a strong normative case for privatization and latent demand in the Ukraine, current laws make no provision for freehold sale. He presented data to show that privatization would yield considerable macro-economic and fiscal benefits: direct sales revenue alone would amount to $13 billion, plus increased taxes and more efficient resource allocation.
In Russia, according to Jan Brzeski (Crakow Real Estate Institute), the emergence of land markets has been inhibited by a different understanding of the social role of property and turf politics. In Poland, where privatization is more advanced, he argued that reforms have been insufficient to overcome extensive resource misallocation. Assignation has taken place at symbolic prices without reforms to ground rents or property taxes, and with high transaction costs. Nevertheless, land market turnover is increasing faster than economic growth and re-sales represent about 25 percent of capital investment.
The1991 privatization program in Albania appears to have stimulated an active property and land market. Research by David Stanfield (University of Wisconsin-Madison) indicates substantial increases in turnover rates and increasing prices, but also extensive conflicts between pre-collectivization and post-privatization holders, contradictions in the many laws and errors in the new documentation. The research points to the relative ease of establishing frameworks for privatization but greater difficulties in allowing markets to function thereafter.
Lusugga Kironde (University College of Lands and Architectural Studies) described how shortcomings in the ‘planned’ allocation system in Tanzania meant that 60 percent of people acquired land through informal methods. This in turn denied revenue to the government since transactions were outside official sanction and in some cases well-off households received plots with a substantial subsidy. Michael Roth (University of Wisconsin-Madison) described a similar situation in Mozambique, where the legacy of state socialism is still felt in the level of government intervention and under-representation of freehold tenure.
In both countries, the assessment of reform was mixed. Tanzania’s New Land Policy (1995), while a useful step in accepting the existence of a land market and providing security to plots with customary tenure, has fallen short of removing the barriers to an effective land market. In particular, Kironde noted that the new measures concentrated decisions in a Land Commissioner despite a national policy of administrative decentralization. The policy offers no incentive to encourage the formalization of informal practices and no stake to ensure the compliance of important middlemen. In Mozambique, since the late 1980s, market-oriented reforms have produced unclear administrative responsibilities and uncertain land rights. One feature has been land disputes with households calling upon newly empowered producer associations to defend claims. The 1997 reforms attempt to guarantee tenure security, provide incentives for investment, and incorporate innovative ideas for community land rights.
In Latin America, reform has been less concerned with establishing markets per se and more with improving their function, especially land reforms motivated by largely rural concerns but which have important urban impacts. Rosaria Pisa (University of Wales) indicated that reforms in Mexico have created the necessary conditions for the privatization of community (ejido) land, but progress has been slow. Less than one percent of land has been privatized in five years due to other government interests and legal ambiguities that have established a second informal land market.
Carlos Guanziroli (INCRA – the National Institute on Colonization and Agrarian Reform, Brazil) argued that rural reform was producing land use diversity, especially through the survival of small family farms. Reform was also affecting Brazil’s urban land markets as capital switched from rural to urban areas, probably raising urban land prices. Francisco Sabatini (Catholic University) argued that the liberalization in Chile had not reduced land prices because landowners’ and developers’ decisions are influenced less by regulations and more by demand.
Overall, the consensus on whether reforms were producing unitary and less diverse land markets was unclear. Agents and institutions are proving to be very adaptable to new conditions, a point made for all three regions. Ayse Pamuk (University of Virginia) argued that, based on her analysis of informal institutions in Trinidad, researchers should look away from formal regulations as a barrier to land market operation. Instead, they should consider how social institutions such as trust and reciprocity were producing flexible solutions to tenure insecurity and dispute resolution.
Clarissa Fourie (University of Natal) described how user-friendly local land records could be merged with registries on marriage, inheritance, women’s rights and debt to produce a useful tool for land administration in Namibia. Nevertheless, she noted that the incorporation of customary practices into land administration to provide security of tenure would mean some adaptation of social land tenure systems. Pointing to research in Senegal and South Africa, Babette Wehrmann (GTZ, Germany) argued that customary and informal agents were flourishing and providing high-quality sources of market information.
The Formalization and Regularization of Land Tenure
Peter Ward (University of Texas at Austin) described the diversity of regularization programs across Latin America, where some countries consider it to be a juridical procedure and others regard it as physical upgrading. Regularization may be an end in itself (mass titling programs), or a means to an end (to develop credit systems). Ward argued that the differences among programs stem from how each government ‘constructs’ its urbanization process and represents this vision back to society through laws and language.
Edesio Fernandes (University of London) explained how Brazil’s Civil Code dating from the beginning of the century created a system of individual property rights that restricted the ability of government to regularize favela communities. The 1988 Constitution attempted to reform this situation by acknowledging private property rights when accomplishing a social function. Nevertheless, legal tensions within regularization programs have failed to integrate the favelas into the ‘official city,’ leading to some politically dangerous situations.
Under different circumstances, South Africa produced a regulatory regime that denied freehold tenure to black households or offered only complicated non-collateral permits to the few. Lauren Royston (Development Planning Alternatives, Johannesburg) outlined how the country’s Land Policy White Paper contemplates legally enforceable and non-racial rights, a wider range of tenure options and opportunities for communal property acquisition.
The two developing countries with the most extensive mass titling programs, Mexico and Peru, were scrutinized by Ann Varley (University College, London) and Gustavo Riofrio (Center for the Study and Promotion of Development – DESCO, Lima). Varley assessed two prevailing assumptions that run through the contemporary policy literature: that decentralization produces more effective land management, and that the regularization of customary tenure is more complicated than the regularization of private property. In Mexico, despite the rhetoric of decentralization, a highly centralized system has been increasingly effective in providing land regularization to settlements on ejido land. On the other hand, the regularization of private property is tortuously long and frequently produces poor results. She commented with some concern on the current trends in Mexico to convert ejido land to private ownership and to move toward greater decentralization.
Riofrio questioned the validity of the claims made for land regularization in Peru. He noted that in reality household interest in property title was quite low, not least because records are inaccurate and therefore offer less security than promised. Moreover, only an incipient housing finance market has emerged, based on the regularized properties. Households are wary of debt but are willing to borrow small sums for micro-enterprises and consumption secured on their housing.
New Social Patterns and Forms of Land Delivery
Would liberalization produce more segregated land markets? Brzeski noted that state planning in Eastern Europe has left a legacy of spatial equity and few informal land holdings, but that it would not last forever and planners need to take this into account in instigating reform. In countries with notable levels of social segregation, such as Chile, Colombia and South Africa, less predictable trends are emerging. Sabatini’s data indicated less spatial segregation in Santiago despite liberalization as intermediate spaces are developed, around malls for example, and as new lifestyles are reflected in ‘leisure home’ developments outside the metropolitan area.
Carolina Barco (University of the Andes) argued that new measures in Colombia, specifically the 1997 Ley de Ordenamiento Territorial, will allow the government of Bogota to capture land value increments and transfer these revenues to public housing and other projects. This process is still problematic, however, even in a city with considerable experience in the use of valorization taxes.
In South Africa, strategies to cope with the ‘land hunger’ of the post-apartheid city, especially the Development Facilitation Act nationally and the Rapid Land Development Program in the province of Gauteng, have offered fast-track land release but have performed less well against the principles of equity and integration. Royston explained that the result has been a large number of invasions and the speeding up of land delivery through local government on the urban periphery that does not challenge the ‘spatial quo.’
Changing the method of land delivery and government stakeholding has the potential to affect segregation and access to land. Geoff Payne (Geoff Payne and Associates, London) outlined the principles and practices of public/private partnerships in developing countries. Although much heralded in international policy, research in South Africa, India, Pakistan, Egypt and Eastern Europe has shown that such partnerships had undersold their potential.
Crispus Kiamba (University of Nairobi) outlined a transition in Kenya from government-sponsored schemes, which left the informal and formal circuits separate, to new approaches with greater NGO involvement, ‘group ranches’ and partnerships. In Mexico, too, partnerships are seen as one method to eliminate the cycle of illegality and regularization. Federico Seyde and Abelardo Figueroa (Mexican government) outlined a new program called PISO, which, despite numerous bottlenecks when compared to previous interventions (e.g. land reserves), was proving more effective.
Land Markets and Poverty Reduction
In my opening remarks I argued that most research on markets considered poverty as a legitimate context, but thereafter seemed more concerned with market operations than with how these operations might affect poverty. In the final session, Omar Razzaz (World Bank) outlined a proposal for linking land market operation to poverty reduction. The ‘Land and Real Estate Initiative’ aims to investigate ways to improve the liquidity of land assets and access to the poor through re-engineering land registries (improved business processes), developing regulatory infrastructure (the exchange-mortgage-securitization continuum), and accessing and mobilizing land and real estate by the poor. The appropriateness of this initiative generated considerable debate, which may help in refining ideas that could benefit the 500 million people living in urban poverty in developing countries.
Gareth A. Jones was the program developer and chair of the workshop.
SHARE
Most countries in Latin America today have become more urban than rural, and they are trying to develop their economies as integral parts of the global marketplace. This process introduces profound cultural and spatial changes, such as increased segregation and conflicts over the use of urban land.
There is a recognized need to strengthen citizen consciousness regarding the liberalization of markets and the withdrawal of state involvement in economic and planning schemes. This changing role of the state from “provider” to “enabler” creates a gap in addressing urban social needs. Participants suggested three approaches to simultaneously improve urban land management and provide for social equity.
First, basic tools to establish and support urban information systems. These include a monitoring mechanism capable of identifying agent and transaction data, including land prices; knowledge of the ‘life cycles’ of urban zones; and utilization of forecasting models capable of establishing the relationships of the local and national economies to the real estate market.
Second, urban policies to balance existing, often inconsistent, market mechanisms. For example, it is difficult to liberalize markets and at the same time impose limits on urban expansion, while trying to provide adequate land supplies to meet the needs of the working poor.
Third, recognition and support of positive actions by community groups and nongovernmental organizations to break patterns of class segregation, as well as efforts by municipalities to utilize instruments such as territorial reserves, progressive financing mechanisms, and improvements in administrative and fiscal procedures.
A major territorial planning problem in Latin America is locating the “edge” of the city, especially when land tenure and occupation respond on the basis of social need rather than legal procedure. Among the forms of urban property outside the rules of commercial law, the most important is corporately held land (ejido), which in Mexico occupies more than 50 percent of the national territory and forms part of all major metropolitan areas. The ejido impedes the natural growth of the real estate market and allows for the expansion of uncontrolled secondary (informal) markets.
To address these and related issues, leading academics and practitioners from the region met in Mexico in April to share their insights into the processes that influence urban territorial order and the instruments available and needed for effective public intervention to achieve social equity and territorial planning objectives. While the seminar participants remain uneasy about the long-term impacts of globalization on Latin America, they agreed that the arena for action, in the next few years at least, will be at the local rather than the national level.
Luis Fernando Alvarez is senior researcher at the Center for Metropolitan Studies, College of Architecture, Art and Design, University of Guadalajara, Mexico.
William J. Siembieda is professor of planning, School of Architecture and Planning, University of New Mexico. The seminar on urban land and territorial reserve issues was cosponsored by the Lincoln Institute and the Center for Metropolitan Studies at the University of Guadalajara.
SHARE
Proposition 13, adopted by a referendum in California in 1978, was the most notable in a series of relatively recent actions to limit the property tax in the United States, and many experts view it as a watershed in state and local public finance. The property tax in virtually every state is now limited to some degree by statutorily or constitutionally imposed base restrictions, rate limits or revenue limits. These limits have influenced the use of the property tax, and there is substantial evidence that the rate of growth of the property tax has declined. The mix of funding for local expenditures also has changed, as cities, towns, counties, school districts and special districts are relying more and more on user charges, special fees, franchise fees and local option sales and use taxes.
The limits on the property tax also have many policy and expenditure implications. There is evidence, significant in some cases and simply indicative in others, that the property tax restrictions have fostered a variety of policy outcomes in the delivery of services to citizens. Some of these tax limits have affected educational outcomes: reduced the number of teachers in classrooms, reduced the qualifications of individuals entering the teaching profession, and reduced student performance in math, reading and science.
The literature detailing the possible effects of property tax limits on local government also reports the following changes: reduced infrastructure investment by local governments, reduction in the rate of salary increases for public employees, and a shift to state-controlled revenue sources that has led to the centralization of power toward state governments (Sokolow 2000). In this context, property tax limits may reduce intergovernmental competition and the discipline on the growth in government that results. Few observers would disagree that Proposition 13 and its imitators in other states have resulted in substantial nonuniformity in the property tax system (O’Sullivan, Sexton and Sheffrin 1995).
These outcomes illustrate the competing tradeoffs that accompany property tax limits. Depending on individual perspectives these consequences could be considered a plus or a minus. Supporters of Prop 13 and its derivatives want lower property taxes and less government (at least for others), but it is unlikely they also want less government for themselves. David Sears and Jack Citrin (1982) have labeled this behavior the “something for nothing” syndrome.
Therese McGuire (1999) notes that among public finance economists the advantages of the property tax for funding local governments approach “dogma.” In an opinion survey of more than 1300 Canadian and U.S. members of the National Tax Association, 93 percent of the respondents with training in economics favored the property tax as a major source of revenue for local governments (Slemrod 1995). This result probably explains why the World Bank and other international advisory groups are spending significant sums of money and offering assistance to improve and implement the property tax in developing and transitional countries. However, it also presents an interesting dilemma: experts support the property tax but voters want to limit it. Why the conflict?
Advantages of the Property Tax
The property tax provides local governments with a revenue source that they can control and avoids the strings that normally accompany fiscal transfers from a regional, state or national government. The result is local autonomy that allows local governments to select the level and quality of services demanded by local citizens. The property tax is relatively stable over the normal business cycle and provides a dependable funding source to local governments that must balance their budgets. Stability is important for certainty in operating budgets and is critical in the financing of long-term debt obligations.
The importance of a stable revenue source has been painfully exposed during the recent economic downturn in the U.S. State governments that are funded by less stable revenue sources are scrambling to balance their current and future budgets by cutting services and increasing taxes and fees. The fact that the property tax is imposed on an immobile base and is difficult to evade also makes it an attractive source of revenue for smaller governments.
Political accountability is another important element of the property tax. A noted function of a responsive tax system is one that provides price signals, or political accountability, on the cost of government to citizens. Compared to almost all other taxes, the direct and visible nature of the property tax suggests that it scores relatively high in this regard. The case for political accountability becomes even stronger when zoning for land use is included in the discussion. Bruce Hamilton (1975) has demonstrated that the property tax, when coupled with local zoning, becomes a benefit tax that leads to efficient outcomes. The combination of property taxation and zoning is the way many public finance scholars describe the characteristics of local finance in the U.S.
Disadvantages of the Property Tax
On the other hand, the property tax is difficult to administer. It requires substantial administrative effort on the part of public officials to discover and maintain the property records of every land parcel. Even with effective methods to discover property, determining its taxable value has always been a challenge to public assessors. Unlike other sales taxes and income taxes, there is no annually occurring event to place a market value on unsold properties. Assessors must value property as if it had sold. Assessors also confront limited budgets and a finite number of trained experts.
Nevertheless, we want public assessors to value property, land and the improvements to land accurately, and to do so as inexpensively as possible. Fortunately, progress has been made in the technical area of property valuation. It is now common to find large and small taxing jurisdictions using statistically driven valuation processes to estimate property values based on carefully designed hedonic models. The technical advantages of statistically driven appraisal systems in terms of efficiency and effectiveness are substantial.
However, the advantage of accurate and timely property appraisals highlights what I believe is a fundamental problem with the property tax and why it receives such low marks from taxpayers and elected officials. When an assessor conducts a reappraisal, the outcome is likely to increase assessed property values. If there is no reduction in the tax rate that was applied to the old tax base, the local government that relies on the property tax receives a potential windfall. It is not surprising, then, that in such situations the assessor and the assessor’s office are quickly identified as the villains of the tax increase. More importantly, these circumstances are powerful incentives to not reassess property regularly and thus avoid the angry backlash of property owners and voters.
Public finance experts have an expectation that the assessor will follow the legal and professional requirements and value property according to state law and professional practice. But, because of the uncertain political outcome when property is revalued, the assessor may act in self-interest, understandably being more concerned about reelection or reappointment than in ensuring that property is revalued properly. A system has been created that requires a reappraisal process and penalizes any assessor foolish enough to ignore it, but over time such avoidance behavior can foster nonuniformity in the property tax.
Political Challenges and Full Disclosure
We have solved many of the technical problems of property appraisal but not the political problems. Nevertheless, I believe there is at least one viable response to the political challenges: states and assessors can adopt a process of truth-in-taxation or full disclosure. The logic of full disclosure design is simple. A chilling effect on property tax growth is posited to occur when the “real” causes of increased property taxes are exposed to property owners. Helen Ladd (1991) states that full disclosure laws “tighten the link between taxpayer voter demand and local budgetary decisions.”
The standard annual tax notice, common in thousands of local tax jurisdictions, does not create a similar chilling effect. A typical tax notice informs property owners about the assessed value of the property, often a modest percentage of market value, tax rates listed in mills, and the total taxes due. If any increases in the assessed value of properties are not offset by reduced tax rates, the new assessed values create additional revenue for the taxing authority. In fact, elected officials can honestly boast that property tax rates have not changed and thus avoid most of the responsibility for any tax increase. An analysis of the behavior of elected officials in Massachusetts found precisely this type of behavior following several cycles of increases in assessed value due to revaluations (Bloom and Ladd 1982).
A property tax full disclosure law generally proceeds in the following manner. Local taxing districts are required to calculate a rate that, when applied to the tax base, produces property tax revenue that is identical in amount to the property tax revenue generated during the previous year. The rate to accomplish this is often referred to as the certified rate; it is calculated by dividing the new assessed value into the property tax revenue from the previous year. The resulting rate is the rate that, when applied to the taxable value of the taxing jurisdiction, will generate the same amount of revenue as the previous year.
This process forces elected officials to reduce the property tax rate—or at least acknowledge that any increase is their choice. If the elected officials choose not to reduce the rate, a public notice must be given that a tax rate increase is anticipated. The public notice is generally carried in a newspaper with specific requirements about the size, placement and language of the notice. In some states a preliminary tax notice is also sent to the taxpayers before that actual budget is adopted, to announce when and where the particular budget hearings on the issue will be held.
Full disclosure laws are intended to create a system with opportunities for input on property tax rate changes and the subsequent size and mix of government, but not at the expense of informed outcomes (Council of State Governments 1977). Full disclosure laws have the aim of a process to inform citizens and limit the rate of growth in property taxes. Nevertheless, like the property tax, full disclosure laws have not enjoyed universal or even modest acclaim. Researchers hold full disclosure laws in such subdued regard that when studying the implications of property tax limitations they commonly classify states having full disclosure laws among the states having no property tax limits.
It is not surprising that many observers suspect that full disclosure laws have little influence on policy outcomes. In states with full disclosure laws, the property tax increases more rapidly than in states with legally binding limits. This suggests that, because full disclosure laws cannot prevent all growth in the property tax, the strongest antagonists of the property tax and the often single-minded opponents to any growth in government will never find the approach acceptable.
However, I believe that full disclosure laws, like property tax limits, have other positive unintended outcomes. They may facilitate improvements in the administration of the property tax because they create a climate that fosters more frequent property tax appraisals by elected county assessors and more thorough and rigorous intervention on property tax matters by state revenue departments. If I am correct, the result is improvement in property tax uniformity. If this posited outcome is validated, then full disclosure laws can and should be judged beyond their immediate role in controlling the rate of increase in the property tax.
Gary C. Cornia is a visiting senior fellow of the Lincoln Institute this year and a member of the Institute’s board of directors. He is also professor in the Romney Institute of Public Management at Brigham Young University and president of the National Tax Association.
References
Bloom, H.S. and Helen F. Ladd. 1982. Property tax revaluation and tax levy growth. Journal of Urban Economics 11: 73-84.
Council of State Governments. 1977. 1978 Suggested State Legislation 37. Lexington, KY: Council of State Governments, 125-28.
Hamilton, Bruce. 1975. Zoning and property taxation in a system of local governments. Urban Studies 12 (June): 205-211.
Ladd, Helen F. 1991. Property tax revaluation and the tax levy growth revisited. Journal of Urban Economics 30: 83-99.
McGuire, Therese J. 1999. Proposition 13 and its offspring: For good or evil. National Tax Journal 52 (March): 129-138.
O’Sullivan, Arthur, Terri A. Sexton, and Steven M. Sheffrin. 1995. Property taxes and tax revolts: The legacy of Proposition 13. Cambridge, England: Cambridge University Press.
Sears, David O. and Jack Citrin. 1982. Tax revolt: Something for nothing in California. Cambridge, MA: Harvard University Press.
Slemrod, Joel. 1995. Professional opinions about tax policy. National Tax Journal 48: 121-148.
Sokolow, Alvin D. 2000. The changing property tax in the West: State centralization of local finances. Public Budgeting and Finance 20 (Spring): 85-102.
SHARE
Information on home values is crucial for researchers and policy makers interested in analyzing and implementing well-informed public policies in the areas of taxation and infrastructure provision. The repeat sales methods, such as the S&P/Case-Shiller index, that are commonly used in the United States to study house price dynamics are not feasible in many developing countries, where declared transaction prices for homes are often underreported for various reasons.
Homeowners also need a trustworthy measure of their home value to aid personal decision making such as retirement (Lusardi and Mitchell 2007), consumption (Campbell and Cocco 2007), savings (Juster et al. 2005), and the debt composition of the household (Disney, Bridges, and Gathergood 2006).
We have assessed the reliability of household survey data on homeowner estimates of home value in Mexico and argue that on average the estimates of short-tenure owners tend to be reasonably unbiased and precise. Homeowner estimates of property market price obtained through such surveys may be the most convenient and reliable means of tracking home values under some circumstances.
Valuing Homes in the United States
All major household surveys in the United States—the decennial census, the Panel Study of Income Dynamics, the American Housing Survey, and the Survey of Consumer Finances—ask a question such as: “What is the value of this property; that is, how much do you think this property would sell for if it were for sale?” The main argument favoring the use of such a question on home valuation is its ease of collection. It is also crucial to assess the reliability of these self-reported home valuations against other measures.
In Kish and Lansing (1954), homeowners in U.S. cities were asked to estimate the market value of their homes, and estimates for the same homes were later made by professional appraisers. The main finding was that the average bias in people’s estimates was around zero. That is, although individuals’ estimates could be quite different from the appraised values, the errors seemed to cancel out on average. This was an important finding, and it justifies the continued use of the question in large surveys. When the researchers focused on different subgroups, they found that new homeowners made the most precise estimates of their home value. There was no increase in accuracy if the respondent was the household head or had more education, or if the appraiser was able to enter the property during the appraisal.
Using the same methods and similar data, Kain and Quigley (1972) confirmed that errors were largely offsetting, but were correlated with the socioeconomic characteristics of the respondent. More education was associated with a smaller positive bias in the homeowner’s estimate. This research also inquired into the determinants of nonresponse to the question, and found that those with higher incomes and education but shorter tenure in the home were more likely to provide an estimate of their home value.
Because the ideal estimate of the market price of a house is the most recent sale price, some studies have compared sales data for recent transactions with owners’ estimates. Goodman and Ittner (1992), for example, compare owners’ estimates with subsequent sales prices for the same property using the 1985 and 1987 American Housing Survey. They find that the average U.S. homeowner overestimates the home value by 6 percent above its sale price, and that the average absolute error is around 14 percent. The error is largely unrelated to the characteristics of the owner, the house, or the local market.
Another approach is to compare tax assessments with homeowner self-valuations (David 1968). The obvious problem with using tax assessments is that they may not be updated constantly to reflect current market conditions, resulting in a flawed impression of housing value. Overall these U.S. studies have found that, on average, owners tend to overestimate the value of their homes by around 5 percent. This overvaluation is unrelated to owner and home characteristics other than the length of tenure in the home. Such studies can thus be used reliably to obtain reasonable estimates of home valuation at a very low cost in U.S. housing markets.
Housing Markets in Developing Countries
In developed countries, access to land occurs mainly through formal purchases, while in developing countries it is not uncommon for a substantial proportion of urban growth to occur through squatting, especially by low-income groups. They can organize themselves and invade government lands, protected areas, and even private property. By the time tribunals establish the illegality of such actions, some politicians may find it useful to provide protection and services to the squatters in exchange for their votes and political support, rather than removing them from the invaded land.
In some cases, local governments engage in expropriation of land that is later transferred to political constituents. Those who acquire their property under such conditions have a harder time determining the monetary value of the property since they did not pay for it initially. Sometimes the property cannot be sold easily since it lacks a valid title.
Another distinction of housing markets in developing countries is the large proportion of self-built housing stock where families acquire a home by building it themselves or hiring friends and family to help them over long periods of time. The prevalence of self-built homes, instead of housing developments by specialized construction companies, occurs in part because the financial system is underdeveloped, and mortgages are either nonexistent or very expensive. The lack of developed mortgage markets can force families into inefficient construction methods, because the house is built in stages using whatever building materials are affordable and available at the time. These constraints can generate unnecessarily high construction costs, as well as unregulated and inefficient building practices. If people estimate their home’s worth as the sum of the expenses incurred in building it, those homeowners in areas without mortgages would be more likely to value their self-built homes at a higher value because of their sweat equity.
Self-building can also influence access to information about the current market value of that property. Housing developments built by a construction company generally have a high degree of homogeneity, so house sales in the neighborhood will generate information on the current value of the surrounding properties. When housing is self-constructed, this information channel disappears, because such homes are not an adequate proxy for the value of another home in the neighborhood.
Jimenez (1982) provides one of the few studies of home values in a developing country. Using data from an impoverished neighborhood in the Philippines, he finds that the mean values of owner and appraiser estimates are not statistically distinguishable. His Philippine sample compares well with Kain and Quigley’s (1972) results for St. Louis, Missouri, in terms of differences in average valuations.
However, Jimenez finds the average absolute value of the differences between individual owner estimates and appraiser valuations to be approximately 55 percent of the mean appraised value, while the comparable figure for Kain and Quigley is approximately 20 percent.
Household Survey and Appraisal Data
Our analysis uses data from a household survey and appraisals for the same homes by an appraiser who is also a real estate agent. The survey, conducted between mid-February and mid-March 2006, included approximately 1,200 dwellings in the outskirts of the city of Acayucan, in the state of Veracruz in central Mexico.
The sampled homes were in the poorer districts of the city, where streets are not paved and many homes lack vital water and sewer services. The average house in the sample has 2.5 rooms. Only 63 percent of the dwellings have an indoor bathroom, and 60 percent have a roof made out of metal sheets, asbestos, or palm leaves. Further, 12 percent of homeowners reported they did not have a property title.
The interviewed families were the owner-occupants, not renters, and most of them lived in small, single-floor homes on a well-delimited lot. Among the housing questions in the survey was: “Approximately how much money do you think this house would sell for nowadays?” The average owner’s estimated home value is $19,948, while the average appraisal is only $12,123 (all figures in 2006 U.S. dollars). The median difference, although much smaller ($1,545), and the mean log difference are also significant for both measures. (See González-Navarro and Quintana-Domeque [2007; 2008] for a detailed description of the survey.)
The other source of data is the set of housing value assessments produced by a trained appraiser and real estate agent. Having only one person perform all the assessments minimized the risks of subjective decision making and varied assessment practices. The appraiser visited one out of every two homes where residents had been interviewed, and the assessments were performed within two months of the household survey, thus reducing concerns about house price inflation or volatility.
In the completed surveys, the response rate for the question on the owner’s estimate of the home value was approximately 74 percent. One important advantage of this study’s two-part procedure is the ability to investigate appraised home values for the 26 percent of respondents who did not answer the question about home value. Hence, unlike any previous study, we look at whether non-response to that question by the owner is related to the home value as measured by the appraiser.
We found evidence that the average appraised value is equal for respondents who did and did not provide a home value estimate. Additionally, age, sex, household head status, and having a property title and tenure are not related to the probability of response. This suggests that homeowners who do not provide an estimate of home value are a random subset of the sample. This is an important finding if homeowner valuations are to be used in other studies to estimate average home prices in a locality in developing countries.
We assume that the appraiser’s valuation is very close to the market value of the house. We also think it is reasonable to interpret the discrepancy between home values obtained from the owners and the appraiser as originating from homeowner’s misperceptions about market value. There are several reasons justifying such an interpretation. First, the appraiser is likely to have a more accurate estimate than the owners of the lot size (one of the most important determinants of home value). Second, the appraiser can infer other housing characteristics accurately. Third, he is likely to be cognizant of the market forces involved in home valuation in the city.
The Relationship Between Owner and Appraiser Estimates
Table 1 shows the average degree of error and lack of precision or accuracy in the owners’ estimates for several subsamples. As in previous studies, our results are shown for different measures of bias (the difference between the owner’s and appraiser’s home value estimates, and the percentage difference in terms of the appraiser’s estimate) and inaccuracy (the absolute difference and the absolute percentage difference).
Among all owners in the sample the average difference between the owner’s estimate and the appraised value is around $7,800, indicating that owners tend to overestimate the value of their homes. The mean percentage difference is 124 percent of the appraised value. In terms of inaccuracy or lack of precision, the mean absolute difference is approximately $13,500, reflecting how different the appraiser’s estimates are from those of the homeowner’s. On average, the owners in the sample have an unrealistically high estimate of the value of their home.
These results contrast with the available evidence for the United States and the Philippines. Both Kain and Quigley (1972) in St. Louis and Jimenez (1982) in the Philippines report a mean percentage difference of less than 0.5 percent. In terms of precision, we also find very different results. In our sample, the absolute percentage difference is estimated to be more than 150 percent, while it is approximately 55 percent in the Philippines and 20 percent in St. Louis. On the other hand, the error and inaccuracy results for short-tenure owners (less than two years) are statistically close to zero. The same result holds for mean percentage error, and the absolute percentage error is reduced by more than 50 percent.
As mentioned earlier, one of the differences between developed and underdeveloped housing markets is the lack of home construction by specialized companies and the lack of information about the distribution of home prices. The last column of table 1 isolates the set of homes that were constructed rather than self-built. For this subgroup, the mean error and the mean percentage error are not statistically different from zero, while the absolute percentage error (33 percent) is the smallest of the four groups. This may suggest that owners of self-built homes provide upwardly biased estimates because self-building over time is more expensive than purchasing an already constructed house.
Determinants of Individual Bias and Inaccuracy
The results suggest that long tenure is responsible for the bias and inaccuracy in homeowners’ estimates. In Gonzalez-Navarro and Quintana-Domeque (2009), we show that neither the discrepancy in the lot size estimate nor the socioeconomic characteristics of the respondent seem to be correlated with the error or the lack of precision of homeowners’ estimates. Only tenure is a significant correlate of bias and lack of precision.
Given these results, we subsequently estimated average home values at the census tract level to study the performance of the self-reported value depending on tenure status. As we argued earlier, self-reported value among homeowners with short tenure provides a more accurate estimate of average home value. One important issue with using only recent homeowners is the small sample size. Table 2 shows that the two measures of bias (mean difference and mean percentage difference) for short-tenure homeowners provide a less distorted estimate of the mean home value, as do the measures for mean absolute difference and mean absolute percentage difference.
Although we made every effort to obtain market prices to benchmark the professionally appraised values, the search proved elusive. This fact underscores the importance of assessing the reliability of self-reported home values in developing countries, where homeowners’ estimated market values seem to be the most available measure of home value.
Conclusion
In our sample, the valuation bias associated with longer tenure is positive, confirming the results found for recently transacted homes in several U.S. studies. Our main finding is that the tenure-driven bias is potentially much larger in a developing country context. Owners with long tenure largely overestimate the value of their homes, with a mean absolute percent error on the order of 150 percent. However, families with tenure of two years or less have reasonably accurate and unbiased estimates of the value of their homes. A cluster of similar homes built by a specialized construction company shows zero bias and dramatically more precise estimates with respect to the other subgroups.
We find nonresponse to the question of home value to be uncorrelated with the appraised value of the house and other demographic characteristics of the homeowner. This suggests that unbiased estimates of the average value of groups of homes can be obtained through household surveys. Additionally, bias and inaccuracy are not robustly related to socioeconomic characteristics, such as family income or level of education of the respondent.
To summarize, the results of this study caution against using homeowner estimates for analysis of individual behavior, but suggest that these estimates can be used to reasonably approximate mean home values for clusters of homes. If the objective is to estimate average home value, then the answers from homeowners with short tenure may be used successfully in future surveys in developing countries.
References
Campbell, J.Y. and Cocco, J.F. 2007. How do house prices affect consumption? Evidence from micro data. Journal of Monetary Economics 54(3): 591–621.
David, E. L. 1968. The use of assessed data to approximate sales values of recreational Property. Land Economics 44(1): 127–129.
Disney, R., Bridges, S. and Gathergood, J. 2006. Housing wealth and household indebtness: Is there a household ‘Financial Accelerator’? Unpublished manuscript. Nottingham, UK: University of Nottingham.
Gonzalez-Navarro, M. and Quintana-Domeque, C. 2007. Description of the Acayucan tandards of Living Survey. Unpublished manuscript. Princeton, NJ: Princeton University.
———. 2008. Do people know how much their house is worth? Evidence from a developing country. Working Paper. Cambridge, MA: Lincoln Institute of Land Policy.
———. 2009. The reliability of self–reported home values in a developing country context. Journal of Housing Economics 18(4): 311–324.
Goodman, J.L. and Ittner, J.B. 1992. The accuracy of homeowners’ estimates of house value. Journal of Housing Economics 2(4): 339–357.
Jimenez, E. (1982) The value of squatter dwellings in developing countries. Economic Development and Cultural Change 30(4): 739–752.
Juster, F.T., Lupton, J.P., Smith, J.P., and Stafford F. 2005. The decline in household saving and the wealth effect. Review of Economics and Statistics 87(4): 20–27.
Kain, J.F. and Quigley, J.M. 1972. Note on owner’s estimate of housing value. Journal of the American Statistical Association 67(340): 803–806.
Kish, L. and Lansing, J.B. 1954. Response errors in estimating the value of homes. Journal of the American Statistical Association 49(267): 520–538.
Lusardi, A. and Mitchell, O.S. 2007. Baby boomers retirement security: The role of planning, financial literacy and housing wealth. Journal of Monetary Economics 54(1): 205–224.
About the Authors
Marco Gonzalez-Navarro is a Robert Wood Johnson Scholar in Health Policy Research at the University of California, Berkeley. He received his Ph.D. in economics from Princeton University.
Climent Quintana-Domeque is an assistant professor in the Economics Department at the University of Alicante, Spain. He received his Ph.D. in economics from Princeton University.
