Chapter 7: Tradeoffs at the lower end

So far this thesis has discussed demand and supply of rental and shared housing, analyzing interactions within them. But these sub-markets operate in a broader context including other sub-markets at the lower end and the overall housing market in the city. It would be wrong to end this study without looking at the wider context in which rental and shared housing operates. Focusing on the bottom portion of the market, this chapter has two main parts. The first drafts the main sub-markets at the lower end, discussing the supply of land , and the role of the mejora sub-market as ownership alternative. The second analyzes the dynamics of household mobility identifying patterns for each tenure category.

7.1. The lower end sub-markets

Diverse and with fuzzy boundaries, the study in Resistencia unveils that sub-markets at the lower end are less homogeneous than what literature suggests. At the beginning this research assumed that they would be somewhat easy to identify. As the study progressed, however, sub-markets proved heterogeneous and with unclear boundaries. Overlapping among them was more the rule than the exception.

Concerning ownership orientation, sub-markets fall in two broad categories: one, ownership-oriented options such as informal subdivisions and land invasions, and two, non ownership-oriented options such as informal rentals and shared housing. The field study revealed four major sub-markets operating in informal settlements in Resistencia: shared housing, rental housing, mejoras, and land invasions. The first two have been extensively discussed in previous chapters; the last two, although ownership oriented, deserve a closer look considering the decisive influence they exert on rental and shared options.

7.1.1. Access to land and tenure

The crucial role of land in self-help housing is widely acknowledged. The availability of land in proximity of employment opportunities is, certainly, a factor contributing to the development of informal settlements. This has been the case in Resistencia, where a great part of the development of the city has taken place through informal settlements, in a process that transformed former public rural land into popular developments. This option has been the most common way of gaining access to ownership for poor families. Subliminally allowed by politicians and government officials, this mechanism still constitutes the main form of land acquisition for the poor in Resistencia.

There are signs, however, that indicate this situation may be changing. First, the city has extended its boundaries beyond its capacity to provide reasonable urban services. This means that new self-help settlements will inevitably be in the far periphery, with increased transportation costs and without basic services for several years to come. A second factor is undoubtedly the belt of defenses against flood that once finished will change the status of 'flood prone' or low-laying lands within the defended boundaries. Finally, there are signs indicating a change in attitude in the political set-up. Most politicians, within a process of increased democratic control, seem to find it increasingly difficult to support invasions and illegal occupations. All this evidence points out that land access for the poor has started to be restricted somehow in Resistencia. The main consequence has been the formation of informal land markets like, the mejora sub-market.

7.1.2. The mejora sub-market: ownership option?

In its most basic form, a mejora is a rancho, a precarious one-room dwelling with mud walls, straw or recycled corrugated iron sheet roof, and the boundaries of the plot more or less defined. The most preferred variation is a mejora in which the initial shack has been replaced by at least one permanent room. Mejoras found in barrio La Isla generally consisted of a one or two-room house with brick walls and iron sheet roof. Prices ranged between $1500 and $3000. Some more precarious shacks in the outskirts of the city were selling for as low as $ 30.

For some households, a mejora is the option closest to the dream of home ownership. People who do not qualify for a house from the government and have the will of building their house prefer to buy a mejora rather than settling in vacant land and start building from scratch. At least, a mejora has overcome the difficult initial stages of informal housing. The mejora sub-market is the option for those who wish to become home owners and do not have the means to access the formal market. Most families buying a mejora acquire tenure rights over a house or a piece of land (see Endnotes 22); nevertheless, they seldom achieve legal tenure (title of the plot). Twenty-one percent of the households interviewed in Villa Ercilia got their homes as a mejora. In barrio la Isla, the percentage rose to thirty-six percent, and to almost half of the interviewees (43%) in Villa Itatí. Despite spans of more than 20 years, only 14.3 % have managed to acquire the legal title of the plot.

A high turn over in neighborhoods such as La Isla is clear evidence of the relative dynamism of this sub-market. Signs of commercialization, in the form of 'for sale' ads, are easy to find all over the barrio. In the transaction, there is no contract other than the word of buyer and seller. It is this informal character what makes the mejora sub-market one of the most active of those addressed in this study.

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Table 7-1 summarizes the range of choices available for poor households as found in the field study. Picking selected examples it gives a quick idea of the rental, shared and mejora sub-markets. In terms of costs, shared options are logically the cheapest. Rental options with rents for rooms in the order $ 90 per month, are not cheap for the meager budget of poor households. At first sight, mejoras seems to provide the most affordable option, with a precarious house selling for a fraction of the cost of a month rent. But then, why do some households such as single mothers (page 1) prefer to rent than to have their own mejora in the periphery. The answer is not easy, but clearly, the direct cost of housing is just one of the aspects weighed in the process of choosing accommodation. Other factors such as, location, sense of security, costs of transportation, social networks, presence of job sources, and so forth, intervene in the decisions.

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7.2. Household mobility

Several authors have visualized the move among tenure forms as a linear, step by step path in which households jump from one form of tenure to another as their income rise and as they life cycle evolves. Turner (1968, 358) for example, in his upwardly mobile consolidator model, distinguishes three transitional phases relating income and tenure. Similarly, Edwards (1982, 133) considers tenure a positive function of income in which each tenancy form corresponds to a different income bracket. This line of thinking assumes that poorer households choose rental options, and as they improve their incomes they move upward towards ownership.

Most evidence gathered in this study suggest, however, that although true in some cases, tenure and income not always have a direct relationship as suggested in the upwardly mobile model. To what extent is the household income and indication of the preferred or possible tenure option, or in other words, does an increased income mean a change of form of tenure? The following analysis examines the relationship between income and tenure among households in the sample.

7.2.1 Income and tenure: a relationship not always positive

A comparison of average incomes for all forms of tenure produces a staircase-like graph in which to each step representing an income level correspond a form of tenure. But this picture, although correct, conceals the real situation at the lower end of the market. As Figure 7-3 shows, individual incomes in each tenure group present great amplitude between extremes. Households with similar incomes have different forms of tenure, and households with the same form of tenure have extremely different incomes. For instance, the gap between the higher and lower ends of owner-landlords is more than $ 800, ranging from $ 180 to $ 1000. This makes clear the diversity within each tenure group and unveils the danger of any generalization.

On the other hand, it is also observable a range of income in which one can find all forms of tenure. Between $ 200 and $ 400, there were six owners, three owner-landlords, five owner-sharers, six sharers, and four tenants. This may suggest that, to a certain extent, households at the lower end have the alternative to choose among different forms of tenure.

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Although in terms of incomes, at least in theory, all options are possible, other factors affecting households' decisions must be considered. Income certainly influences the type of tenure, but rather than income, it seems the capacity to generate a surplus what makes the transition towards ownership viable. This explains how owner-landlords or owner-sharers with extremely meager incomes have managed to become home owners. Other factors such as stage in life cycle, household constitution, or the socio-cultural background also play a determinant role in the resulting tenure form.

7.2.2. Tenure cycles

What are the chances that a renter turns into landlord, or that a sharer turns into owner-sharer or landlord? Not many taking into account their incomes. However, half of the landlords interviewed have passed through all forms of tenure before. This may indicate that for some households the upward mobility model as suggested by Turner is still valid. The cycle can be summarized as follows:

Migrants from the interior of the province, or newly formed households rent a small room preferably in vicinity of working opportunities. After a few years of meager savings, they decide to squat in public land or buy a plot in an informal subdivision. Either they start from scratch building a room or they acquire a mejora that comes with the plot. As money becomes available and the neighborhood becomes organized, they get water and electricity. So far the transition towards ownership, but what is what makes the new settled household turn into a landlord. Lack of tenure is not an obstacle. If location and demand make rental housing feasible, eventually, the potential landlord will start building his first rental room. Often, room letting precedes the finishing of the main house.

As it came out of interviews with owners who were building or consolidating their houses, letting out seems to be inherent to the ownership process, rather than induced by external influences. Self-builders, or should one say self-managers, tend to think of renting as a natural consequence of their "state of ownership." This suggests a strong link between owner involvement in construction and the likelihood of rentals.

Moreover, the possibility of renting out is an inherent part of the idea ownership, and as it was mentioned in the interviews, it is one of the aspects that make it attractive. For the majority of households, ownership is overwhelmingly the most desired option. Very few households, however, seem to complete the cycle, at least in a transitional path.

7.2.3. Mobility patterns

(See Chapter 1 for a glossary of the following terms)

Attaining to different income levels and socio-cultural characteristics, each tenure category has different mobility tendencies. Although the case histories recorded in the study were far from exhaustive, they provide some insights of the form poor households move over time.

  • Renters : In most cases, renters tend to keep the same form of tenure when moving (that is, they move from one rental to another). Some, however, eventually achieve ownership in the self-help periphery resembling Turner's bridgeheader consolidator model. In other cases, the move is towards shared accommodation; for example when close relatives move to town and get a home with some extra space.

  • Sharers : Most sharers keep their accommodation for several years. Some, when the relation with the owner deteriorates, move out to rented housing. Others, move directly into ownership; for example when they inherit their parents home or when they buy a mejora with the savings of several years. In the case of plot sharing, they may turn to ownership when they achieve legal recognition.

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  • Owner-landlords : Being a landlord, is the higher step in the tenure ladder. It provides owners a higher status and better incomes. For this reason, owner-landlords tend to remain in their tenure option. Some have achieved this condition passing through all tenure stages. Others have always been owners and turned into landlordship as a business. Rather than moving, they tend to improve and enlarge their houses.

  • Owner-sharers: Owner-sharers very seldom move. Frequently, they turn into landlords once their shared accommodation is freed.

  • Owners : Some owners turn into renters or sharers. For instance, when children marry and form new households or when elders decide to move with their sons or daughters. Some owners turn into landlords. Moreover, the possibility of letting out is usually associated with the acquisition of ownership.
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7.3. Summary

Presenting the main ownership option: the mejora sub-market, and its role in relation to rental and shared alternatives, this chapter has completed the spectrum of options at the lower end of the market. Access to land for the poor has started to be restricted in Resistencia indicating that achieving ownership even in informal settlements is likely to become increasingly difficult. The mejora sub-market constitutes the main ownership option for those who cannot access the formal market. Yet, with the most affordable options in distant and isolated locations, a variety of 'hidden costs,' such as more expensive transportation and lack of social networks, turns these alternatives inconvenient for some families.

Households at the lower-end have a range of choices at their disposal, however, very few move among these options. Income is certainly not the only factor influencing their move in the housing market. Other determinants such as stage in life cycle and saving capacity seem to have a preeminent role. Households even in the same income bracket have different mobility tendencies. Some with similar incomes choose different forms of tenure, and vice-versa.

Although the linear transitional step by step model holds true in a few cases such as some landlords, residential mobility for the majority of households does not necessarily mean upward ascension. Furthermore, for some, the jump from rental and shared options to ownership seems increasingly difficult to achieve.

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