Recent increase of tenancy in young Spanish couples: socio-demographic factors and regional market dynamics

The increase of the proportion of rental-occupied dwellings between 2001 and 2011 is one of the most outstanding results of the 2011 Spanish census. This study aims to explain this increase in tenancy, unveiling the sociodemographic factors behind this pattern at the individual level, and at the regional level clarifying the role of market dynamics in this change. Accordingly, using the microdata from the 2001 and 2011 Spanish censuses, multilevel logistic models are estimated. Two main findings can be drawn from this study: the recent increase in tenancy occurs concurrently with a process of convergence towards a greater acceptance of tenancy among sociodemographic groups, and changes in housing purchase prices have an impact on the likelihood of a young Spanish couple being tenants. The policy implications of these findings are twofold. On the one hand, a more active role in the regulation of housing purchase prices to deter speculative demand is needed. On the other, a greater demand for tenancy requires changes in the tenure composition of Spanish housing stock. Finally, having effective alternatives to homeownership, young adults could rely less upon family networks during the transition to adulthood which could ultimately contribute to a reduction in late parental home-leaving and encourage family formation.


Introduction
The relative increase in rental-occupied dwellings from 11.4% to 13.5% between 2001 and 2011 is an outstanding result of the 2011 Spanish census and a turnaround in the continuous decline of tenancy since 1950 that was previously anticipated by Pareja-Eastaway (2010). Data from more recent national surveys confirm this upward trend (Housing Europe, 2015). Notwithstanding, this trend is compatible with a significant interregional heterogeneity. According to the 2011 census, in both the Balearic Islands and Catalonia, the rental-occupation rates were approximately 20% whereas, in the Andalusia and the Basque Country the rates were under 10% of the housing stock.
Based on the evidence found in the 2011 census, this study is substantiated in three developments. First the increase in renting gained momentum after the outburst of the housing bubble of the 2000s. Second, this change in the housing system has been led by the youngest cohorts and it is connected to housing behaviour changes associated with these ages, involving even the most standard household forms -couples. Third, this process is not homogenous across the Spanish territory and it is related to local and regional factors, such as the local housing market dynamic driven by housing prices.
With this in mind, this study seeks to examine the proliferation of tenancy in Spain to reveal the sociodemographic factors informing the pattern, and at the regional level identifying the role of market dynamics. This study is guided by the hypothesis that changes in housing purchase prices affect the chances of young Spanish couples being tenants by estimating multilevel logistic models for two very distinct contexts, 2001 and 2011. At the individual level, the data is composed of women aged 25-34 years old living with a partner and children, if they have any, without any co-residents in 2001 and 2011. At the regional scale, the 50 Spanish provinces are considered (NUTS 3).

The boom and bust of the Spanish housing bubble and the rise of tenancy
The increase of tenancy in Spain falls within two different phases. The first phase is characterised by the Spanish housing boom between 1997 and 2007. It is often associated with the demand "shock" (Módenes and López-Colás, 2014), which was caused by an increase in: the number of new households (mostly young adults and immigrants), the acquisition of new dwellings by middle-aged household heads due to lower mortgage requirements, the acquisition of second homes by national and European citizens, and other components, such as speculative Spanish and foreign investment (Rodríguez López, 2008). These demand factors fed a boom rooted in faulty financial and planning practices (Naredo, 2010;Romero, 2010). In Spain, the economic prosperity climate that occurred during the bubble was largely stimulated by the construction sector boom (Romero, 2010;Arrazola et al., 2014). Housing prices soared, mortgage access was eased and household indebtedness increased (García-Montalvo, 2007). Even without a Global Financial Crisis (GFC), Spain would most likely experience "a correction due to its extremely overheated housing market" (Yeh-Yun Lin et al., 2012: 14).
In the second phase, after 2007, an especially severe version of the GFC arrived in Spain, accompanied by a real estate crisis. The GFC started at the end of 2007 in the USA (Camarassi et al., 2009) and rapidly became a global event, slowing down the European markets and severely impacting on southern European economies (Yeh-Yun Lin et al., 2012). In Spain, the sudden outburst of the housing bubble was accompanied by a dramatic reduction in housing demand and a sustained fall in housing prices (Rodríguez-López, 2008 Arrazola et al. 2014) and the crisis and bailout of most of the banking sector (Arrazola et al. 2014).
During the first years of the boom, steady low tenancy and high homeownership rates were compatible with rising house prices. However, at the end of that period, the tide had turned. Tenancy started to grow among less well-off households, such as immigrants and young adults alike (Módenes, 2011). After the bubble burst, a serious fall in housing demand reinforced this process, which ended in a surge of evictions of recent low-income owners with mortgages (Asociación Hipotecaria Española, 2012;CGPJ, 2013) and made homeownership less attractive. Consequently, acknowledging the relationship between economic cycles and tenure preferences (Malmendier and Steiny, 2016;Shiller, 2007), this study assumes that changes in housing purchase prices shape the likelihood of young Spanish couples opting to be tenants.

Early stages of life in couple and housing tenure dynamics
In 2016, although the overall tenancy rate in Spain was 16.3%, the tenancy rates among younger adult households (household heads aged under 30 years old) reached as high as 52.8% (INE, 2017). Apparently, the increasing costs of housing during the last years of the bubble challenged the pre-existing model of household formation among young Spanish adults. As a result, demographic heterogeneity increased as the youngest cohorts started to move away from the conventional behaviour (Módenes and López Colás, 2014). As put by Myers and Lee (2016), the change of population-housing relationships is normally led by the youngest cohorts, and Spain is not an exception.
Independence from the parental home often overlapped with access to homeownership, which was granted with the aid of the family, or, more recently, through mortgage financing (Holdsworth, 1998;Ahn, 2001;Jurado, 2006;Mínguez, 2016).
In fact, the residential behaviour of young Southern European households has been affected by inadequate housing and fiscal policies. In Greece, Italy, Portugal and Spain, the low proportions of social housing and private renting stock are closely related to the high age of leaving the parental home (Iacovou, 2002). More recently, in Spain, the repeal of the tax deduction for new home purchases and the increase in the related Value Added Tax, in 2012, probably have had a positive impact on tenancy rates (Ortega, Rubio and Thomas, 2011;Mora-Sanguinetti and Rubio, 2014).
In order to promote residential emancipation, in 2008, Spanish policymakers implemented the Renta Basica de Emancipación, which consisted in a subsidy for young adults aged 25-29 years old. In 2012, this benefit was discontinued for new beneficiaries. It was the first measure in Spain that aimed to promote tenancy, by clearly going against the pro-homeownership policy agenda (Gentile, 2016). Aparicio-Fenoll and Oppedisano (2012) found that this measure had two major impacts: it significantly helped young Spanish individuals leave their parental homes; and it increased the likelihood of living with a partner or having a child. However, a similar research carried out by Ahn and Sánchez-Marcos (2017) did not find any significant effects. Broadly, it seems demonstrated that the growth of the tenancy stock and the preference for this type of housing was mostly influenced by the GFC (Mínguez, 2016).

Spatial heterogeneity of the housing tenure patterns
The growth of the proportion of tenancy in Spain is not a geographically homogeneous process. Main urban and touristic areas have a significant rental-occupied stock while in others, predominantly rural areas, the size of rental stocks is negligible. It is to be expected that regional contexts have an effect on tenure behaviour (Lerbs and Oberst, 2014), however, the factors involved differ according to the characteristics of the housing system. Thus, in a liberal, capitalist country like the USA, the divergence of tenure structure at regional and metropolitan scale is based mostly on housing market factors: patterns of housing prices, local economic conditions or housing stock structures (Lee and Myers, 2003). In Germany, capital requirements needed to afford homeownership play an important role in understanding the regional variations in homeownership rates (Lerbs and Oberst, 2014). On the other hand, in non-capitalist or transition societies, such as China, where public control of the housing market is strong enough, factors like the degree of implementation of housing public policies or the density of relations between private and public spheres take the lead (Huang and Clark, 2002).
In the Spanish case, both market and policy factors are at play. Etxezarreta et al. (2013) pointed to place-based institutional factors (specific housing policies at European, national or regional scales) to explain divergent regional trends. Cancelo and Espasa (2000) identified the territorial heterogeneity of housing prices. Due to their dynamic nature, local or regional housing prices are appropriate to explain the historical evolution of geographical differences in tenure choice. Regional diversity has also been a key dimension in the interrelationship between household formation and housing integration of the young Spanish population (Holdsworth and Irazoqui, 2002).

Assessing the changes in the likelihood of being a tenant. Research questions for a multilevel approach
The uneven regional increase in rental-occupation between the 2001 and the 2011 censuses illustrates the way the GFC and the housing bubble burst affected households.
In relation to the Spanish context, some research questions arise at two levels.
1. At the individual level, has the increase in tenancy been driven by: Has the influence of the regional level changed over time?
2.5. Is it possible to identify a regional typology?
Thus, the regional dynamics of the Spanish housing system are worth to explore at the regional/provincial level (50 units, NUTS 3 level), while preserving the impact of regional factors that stay constant over time and have an impact on tenure status choice. This disaggregation will enable a better insight of the contextual differences in socioeconomic and territorial dynamics, searching for a regionalization of this heterogeneity, while preserving the impact of regional unobserved heterogeneity.
Therefore, this study uses the microdata of the Census of Population and Housing Since this study acknowledges the effect of individual and contextual variables on the preference for tenancy and recognizes the regional heterogeneity of the Spanish housing system, the empirical analysis is structured on two levels. Accordingly, multilevel logistic regression models compute the relative risk of women aged 25-34 years old living with a partner in a rented-occupied dwelling against other forms of housing tenure (mostly owned-occupation with or without outstanding payments).
This risk is determined by independent variables at the individual and the regional levels. At the individual level, the independent variables cover three dimensions: Demographic. This dimension includes the age of the woman and the combined citizenship of both partners. Age is grouped in five two-year age-groups. Citizenship is considered in four alternatives: both partners are foreigners, the woman is Spanish and the partner is a foreigner, the woman is foreign and the partner is Spanish, and both partners are Spanish.
Social. This dimension covers the educational level and the type of partnership. As with age, the model considers the education of the woman. Three levels are considered: lower than secondary, secondary, and tertiary level. 4 Unfortunately, the Spanish census does not collect income variables. For that reason, in the model, the educational level controlled by age also acts as a proxy of socioeconomic status. Finally, the type of partnership distinguishes married from cohabiting couples.
Territorial. This dimension comprises the size of the municipality of residence in seven categories: two for the rural environment (up to 2,000 and from more than 2,000 up to 10,000 inhabitants), two representing small cities (from more than 10,000 up to 20,000 and from more than 20,000 up to 50,000 inhabitants), two representing average size and big cities (from more than 50,000 up to 100,000 and from more than 100,000 up to 500,000 inhabitants), and one category representing metropolitan centres (more than 500,000 inhabitants). The size of the municipality is included in the modelling as a control variable since it is thought to represent the individual lifestyle of households and housing preferences.  6 Results and discussion

The geography of renter-occupation in Spain
In order to unfold a first overview of the sociodemographic factors and the regional market dynamics behind the increase in tenancy between 2001 and 2011, in Spain, the descriptive results were examined. The results show that the proportion of women aged 25-34 years old living with a partner in a rented-occupied dwelling increased from 11.1% in 2001, to 17.5% in 2011 (Table A.1 in Appendix). However, these proportions are very heterogeneous at the province level. Figure 1 shows that, in 2001, thirteen provinces were below the 8% threshold, and none was above 25%. An initial exploration of the relationship between regional configuration of housing prices and the other regional indicators considered shows that north-east regions where higher tenancy rates are, in 2011, tended to have more stable housing prices (Fig. A.2 in Appendix), to be dense and urbanized (Fig. A.3 in Appendix) and to be characterized by a medium or older populations than the average (Fig. A.4 in Appendix). However, since there are no clear-cut geographical patterns, the multilevel analysis will shed more light on these relationships.

Individual variables: the younger and more urban, the likelier to be tenants
A Model 0 has been modelled without any independent variable to quantify the effect of the predictors as they are introduced later into the model (Table 1)  With regards to mixed couples, results suggest that the likelihood of being a tenant is significantly higher if the foreign partner is a man rather than a woman. There is a slight convergence of the coefficients between 2001 and 2011, except for mixed couples in which women are Spanish.
Regarding the type of partnership, and in line with Módenes and López-Colás (2007), cohabiting couples are 2.37 times more likely to be tenants than married couples. Being married positively discriminates in the access to homeownership, as well as in other features related to family formation (Jurado, 2003). Additionally, as observed by Cabré and Módenes (2004), tenancy may also be a temporary option until the partners gather the necessary socioeconomic resources to marry and become homeowners.
Heterogeneity is decreasing softly with time, meaning that the type of couple is less decisive on the choice of housing.
The differences between the educational categories are smaller. In general, less educated women are more likely to be tenants. The exception is women with a secondary education level, as they have a lower likelihood than the reference category (0.85). These results are in line with the work of Ahn (2001) and Forrest and Murie (2013), which found a positive relationship between social position, wealth, income, and homeownership. There is an important historical convergence among education categories, as tenancy is spreading to less vulnerable categories.
Age shows the expected effects since the likelihood to live in a rented-occupied dwelling decreases along the life cycle (Speare, 1970;Mulder and Wagner, 1998;Cabré and Módenes, 2004). When the female partner is 25-26 years old, the risk is 2.38 times higher than when she is 33-34 years old, the reference category. Women aged 27-28 years old are 2 times more likely to be a tenant, while those aged 29-30 and 31-32 years old have a risk of being tenants of 1.46 and 1.24, respectively. With regards to change over time, the coefficients of the youngest households in 2011 are higher than those in 2001 for the same category. Additionally, the increases of the coefficients of the agegroups 29-30 and 31-32 are more modest, hence the heterogeneity by age has increased.
As for the urban character of the household, the more urban the household the more likely to be a tenant; a pattern previously mentioned by Módenes (2011). Households living in municipalities with over 20,000 inhabitants, especially those with more than 500,000, recorded relative risks 3.53 times greater than the households living in rural municipalities of less than 2,000 inhabitants. The likelihood for tenancy of urban

Contextual variables: housing purchase prices have an impact on the propensity to tenancy
The contextual variables have been added to the individual models so that two multilevel models are obtained. The variance between provinces tends to decrease (  Regarding the results of Model 8 (2001) and focusing on the effect of the CAGRs, the couples that lived in the provinces with the highest price increase (Q3 and Q4) were the least likely to live in renter-occupied dwellings, with odds ratios of 0.71 and 0.85, respectively, versus the reference category (Q1, the lowest increase of prices). However, this relationship is not perfectly linear, as couples in Q2 are 1.25 times more likely to live in renter-occupation than those in Q1.
The results for 2011 show differences worth mentioning when compared to 2001. The first, quite evident since the sign of the CAGRs is the opposite in all provinces, is that the couples living in the provinces where the prices in the period 2008-2011 dropped less (Q4, reference category) are the most likely to be tenants.
Regarding the proportion of high-rise buildings, in 2001, the risk of tenancy in provinces with a high or medium-low proportion of high-rise buildings was lower (0.76) and higher (1.20) that in the remaining provinces (Q1 and Q3). In 2011, in the same categories, the relative risks are 0.06 below and above the reference category (Q1, low proportion of high-rise buildings).
Finally, the mean age of the population was quite homogeneous in 2001, although a higher likelihood to be a tenant in the most aged provinces (Q3 and Q4), perhaps due to the existence of a greater supply of second-hand housing and to an older housing stock. In 2011 this relationship becomes more evident. The odds ratio of being a tenant in the oldest provinces (Q4) was 1.34 times higher than those in the reference category (Q1).
To sum up, the analysis show that housing purchase prices have an impact on the likelihood of a young Spanish couple being a tenant, thus confirming the main hypothesis of this study. Additionally, although less substantive, residing in less urbanized regions where heterogeneity has decreased or in more demographically aged structures where divergence has increased were also associated with a higher tendency for tenancy.

Conclusions
This study highlights the role of the place of residence in understanding the housing dynamics in Spain. Moreover, that the regional heterogeneity in tenancy is explained mainly by contextual factors and not only by the differences in population structures Contrary to what could be expected due to the uncertainty brought by the GFC, it seems that the regional dimension is less efficient now than before to explain the Spanish housing processes (Research question 2.4). These traits are worth to monitor in the future through more in-depth research. Moreover, our analysis has not been able to identify solid regional typologies (Research question 2.5). The results suggest that there has been a process of cohort and territorial innovation in Spain. This surge in tenancy is being led primarily by very young households looking for independent housing options. This trend seems to be stronger in metropolitan settings, also in old residential contexts and, certainly, in regions with more stable housing prices.
Assuming that a trend towards higher tenancy rates is positive for the Spanish housing system, and for young Spanish couples, two main policy implications can be drawn from this study. First, given the relationship between housing purchase prices and the demand for tenancy, a more active role in the regulation of purchase prices to deter speculative demand is required. This regulation would need to operate at the monetary, fiscal, and land-use levels to increase effectiveness. Second, a greater demand for tenancy would require changes in the tenure composition of Spanish housing stock, making the case for non-speculative investment, and an increase in the social housing stock. In this matter, a sustainable policy for regeneration and urban rehabilitation would be particularly regionally sensitive.
Finally, the trend in tenancy rates is a clear sign of a decrease in the statutory meaning of ownership in Spain that can ease the transitions between life-course events among young Spanish couples, especially parental home-leaving and family formation, but also fertility, alleviating the stress on family networks in housing provision.