Americans can sometimes forget how easy it is to find housing, with banks regularly advertising attractively priced mortgages and fee-free checking accounts, but in other countries getting a home loan is not so easy. Two University professors are trying to find out why.
Darden Prof. Frank Warnock and Architecture Prof. Veronica Warnock, an economist in the Urban and Environmental Planning Department, received a fellowship from the Hong Kong Institute for Monetary Research to study the ways in which people all around the world are able to obtain housing.
Many people around the world are not able to find adequate housing, which affects their quality of life, she said.
Frank Warnock likened housing to healthcare because they are both important for the people of developing nations.
"Housing is a basic right," Frank Warnock said.
Warnock addressed the perspective of many Americans who do not recognize the accessibility of funding through a sophisticated banking system.
"If you have a good idea here in the U.S., you can get funding for it and try it out," Frank Warnock said.
In many countries the financial system is not developed to the extent that is in the U.S.
In many places there is no system for borrowing and lending money in order to finance housing because no credit bureau exists to make banks aware of potential risk.
Lenders "don't have any idea about the riskiness," Veronica Warnock said. "How can a bank know if you are a worthy borrower?"
Without solid financial infrastructure, people in developing countries may be prevented from obtaining the housing they need, and the Warnocks said they hope their data will change that.
"If you're hard-working you should be able to get ahead," Frank Warnock said.
The Warnocks said they will be looking around the world at different housing finance systems to examine the ability of countries to make housing available, and then to compare those countries to see which systems work in different levels of development.
"Part of the project is to collect the data and the other part is to understand the differences across countries," Frank Warnock said.
Currently, very little data exists analyzing the housing situations in various countries and this is preventing countries from implementing improvements in their own system.
"Many countries don't realize where they stand," Frank Warnock said.
Veronica Warnock said she hopes their research will help policy makers "find affordable housing solutions."
"It should certainly inform housing policies around the world," Frank Warnock said. "Policy changes will lead to better outcomes in housing finance."
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