Where do Property Rights Matter More? Explaining the Variation in Demand for Property Titles across Cities in Mexico

Abstract

Summary This paper examines the variation in the value of property rights to housing in Mexico, focusing specifically on differences between urban housing markets. Roughly 30% of owner-occupied houses in Mexico do not have a proper deed. Houses with no deed are estimated to be five percent less valuable than otherwise similar houses with a full deed, yet this premium varies widely across cities. I match data from the 2012 and 2014 National Survey of Household Incomes and Expenditures to different sources of city-level data in order to examine hypotheses explaining this variation in a multilevel regression framework. I find that deeds are valued more in cities with more highly educated residents, more political competition, and more voting. Measures of local economic activity, degree of informality, and the regulatory bureaucracy are not associated with higher value to full property rights. Additionally, I find that more educated households value deeds more, and having a deed is more valuable for larger houses in neighborhoods with less vacancy and higher infrastructure quality. Based on these results, I suggest funds to subsidize titling should be redirected to places where titles are worth more. More broadly, I suggest policymakers reconsider framing property-titling programs as poverty alleviation. Low-income households would benefit more from subsidies for improvements to housing and residential infrastructure. At the same time, the federal government should further push to reduce the costs of transferring property.

Land values, property rights, and home ownership: Implications for property taxation in Peru

“…The authors conclude that a titling policy may reduce poverty not through access to credit but through long-term investment in housing and human capital. Monkkonen (2016) analyzes the effects of titling on property values in Mexico. Using data from a national survey of income and expenditures for two year, 2012 and 2014, he estimates that titles produce a 5 percent increase in property values.…”

Tenure inequality, public facilities and housing prices: Evidence from Shenzhen, China

“…Along with the flourishing of the informal housing markets (Webster et al, 2016), growing attention has focused on the pricing mechanism of informal property. Empirical evidence from many cities in developing countries demonstrates the critical role of the presence of legal title and the form of property rights in determining housing prices (Monkkonen, 2016; Nakamura, 2017). Generally, informal settlements are perceived to be excluded from urban infrastructure and basic services (McGranahan, 2015; Shrestha et al, 2021), and therefore the impact of public facilities on informal housing prices is under-discussed.…”

Homelessness, social relations and institutional logics: property rights without property?

“…Property rights have, since Adam Smith, occupied primacy of place within economic and legal discourse and are regarded as essential for the efficient allocation and exploitation of scarce resources (Demsetz, 1964(Demsetz, , 1966(Demsetz, , 1967. ii Within economic theory, property rights feature preeminently as regards a multitude of themes: R&D activity by local and foreign firms (Gittelman, 2008;Luo, Sun, and Wang, 2011), economic growth (Bose, Murshid, and Wurm, 2012), land values (Markussen, Tarp, and Van den Broeck, 2011;Monkkonen, 2016), effects on poverty (Parizeau, 2015;Webster, Wu, Zhang and Sarkar, 2016), uncertainty and investment decisions (Kemeny, Castellaneta, Conti, and Veloso, 2014), boundaries between formal and informal activity (Adriaenssens and Hendrickx, 2015;Kus, 2010), innovation (Hoetker and Agarwal, 2007;Jay, 2013;Sweet and Maggio, 2015), market construction (McKague, Zietsma, and Oliver, 2015), institutional theory (Batjargal, Hitt, Tsui, Arregle, Webb, and Miller, 2013;Battilana and Casciaro, 2012), and various theories on entrepreneurship (Gurses and Ozcan, 2015).…”