Cover: The Socioeconomic Effects of the Working Poor Moving to Permanent Dwellings

The Socioeconomic Effects of the Working Poor Moving to Permanent Dwellings

The Case of the Ashray Affordable Housing Pilot Project in India

Published May 30, 2014

by Nicholas E. Burger, Italo A. Gutierrez, Krishna B. Kumar, Jill E. Luoto, Dhaval Monani, Kavita Raichura

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Research Question

  1. What effects could private-sector affordable-housing projects have on the well-being of low-income households?

RAND Corporation researchers assessed the socioeconomic effects that moving into permanent dwellings — in particular, into the Ashray Affordable Housing Pilot Project in India — has on the working poor. The aim of projects like Ashray is to build houses in peri-urban zones on the outskirts of large metropolitan areas that are home to manufacturing and industrial bases. By capitalizing on cheaper land, the demand for affordable housing from local workers, and creditworthy risk profiles of employed workers seeking home loans, low-cost housing projects may help low-income workers and their families improve their living conditions, while still allowing developers to recover their costs. RAND researchers, in collaboration with ISB, undertook a mixed-methods evaluation of the Ashray project as an initial step to understand the impacts that such private-sector affordable-housing projects can have on the well-being of low-income households. They collected qualitative data through focus-group discussions of current Ashray residents and carried out a quantitative survey of the residents and owners of the Ashray units in late 2013 and early 2014. Together, these two data sources provide early evidence into the ways in which this new housing project has affected the lives of its residents. They asked residents about their living situations, housing amenities, commute times to work, social networks, and financial situations, both prior to moving to Ashray and currently while living there.

Key Findings

Ashray Residents Are Pleased with Their Decisions to Move to Ashray

  • Roughly two-thirds of surveyed residents were found to be owner-occupiers of their homes, while one-third were renting their homes.
  • Better housing quality and better amenities were the most important motivations that renters cited for relocating to Ashray. Also, many households have less crowding in their new accommodations.
  • For those who own their properties, the opportunity for home ownership emerged as a key factor that motivated residents' decisions to move. Ashray's business model included innovative financing support mechanisms to expand access to home ownership to those who otherwise may not qualify for private-sector mortgage loans.
  • The opportunity for home ownership and the opportunity for young families to live on their own and in better housing outweighed any potential negatives from living in an outlying area, such as longer commutes for some family members and greater distances from relatives and amenities, such as schools, hospitals, and entertainment. The benefits of moving to Ashray also outweighed the associated increase in monthly living costs.
  • The need for high-quality housing to offset further expansion of slum-style dwellings in India is clear, as is the need for such housing to be made affordable, whether via innovative financing models or via innovative construction designs or some combination thereof. The Ashray housing project may be one such model and combines an innovative model of construction (by capitalizing on cheaper land near industrial sites) with innovative financial support mechanisms.

Recommendation

  • Our evaluation draws on observational data and was conducted after Ashray residents moved in. We recommend that evaluations of future affordable housing projects like Ashray include the collection of baseline data on potential residents before construction, as well as ex post data after the move is complete. Those evaluations could provide even stronger evidence on the impacts of high-quality housing on young migrant families and their health, well-being, and overall life satisfaction. In turn, such evidence — especially if derived from profitable private-sector models — could help to address the burgeoning affordable-housing shortage throughout many of the world's cities that continue to grow at unprecedented rates.

RAND Corporation researchers conducted the research reported here in collaboration with ISB. Within RAND, the study was housed in RAND Labor and Population.

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