The Real Estate Housing in Ilocos Sur: Its Economic Impact

 

Scott Jason P. Llanes, DBA, FRIBA, FRIRes

University of Northern Philippines, Quirino Boulevard, Tamag, Vigan City, 2700, Ilocos Sur, Philippines.

 

ABSTRACT:

The study assessed the Housing Development in Ilocos Sur and determined the level of assessment on housing development; the economic impact along multiplier effects in businessmen, broker’s commission/income, and consumer expenditures; and the economic impact affecting the level of satisfaction of homeowners, economic, and government policies as the value of assessing and evaluating the real estate housing development in the Ilocos Sur Province is believed to be of great contribution since it gives room for opportunity for businessmen and would-be businessmen who are or will be engaged in the Realty Service Industry to analyze more of the challenges and/or situation of the industry. Seemingly, it benefits those who wanted to engage themselves into such kind of endeavor. Data gathered were treated statistically using frequency and percentages, mean, and linear regression analysis. From the findings, the following conclusions were drawn: (1) Local developers have comparative advantage; (2) The industry contributes to economic development; (3) Homeowners are satisfied with the quality of goods and services; (4) Few number of owners/developers gives higher revenue; (5) Housing development affects income opportunities; and (6) The broker’s commission/income is adequate that it sustains employability. Based on findings and conclusions, the following recommendations are forwarded: (1) Developers should continue to improve delivery of goods and services; (2) Other investors should come in to add other players in the industry; (3) The provincial government must encourage more housing developers; (4) Owners should give incentives to homeowners; (5) Owners should provide more affordable housing; and (6) Real estate owners should provide lesser price for low-income earners and beginning families.

 

 

 

INTRODUCTION:

To have stability of life is everybody’s vision. Most individuals work even beyond the required hours of selfless and dedicated working, sacrificing much of their time for their families and social life just to earn for more, as they would try to trim down expenses to save for tomorrow. Every Filipino is striving in their endeavor. Every Filipino ventures to anything that would surely give them income.

 

The rising need for modernization entails not only for a better quality of life but also comfortable living. Development provokes tighter competition and perhaps even that survival of the fittest thing will apply. As one exerts effort to achieve stability, one also craves for a share of protection and security. At the moment, the most tangible measure of every single Filipino’s success, wherein he invests majority of his earnings, is his ownership of a house - a home that gives him fulfillment.

 

Due to the increasing demands of property ownership among individuals, came into business existence is the real estate industry. A property may come in multifarious forms like a house, a building, a business establishment, and the like. Forgotten is the only thing that will make these properties do exist which is the land. To acquire a piece of land means starting to venture and putting pieces of life to its solid form. The birth of real estate industry has provided regulations that made land ownership a fittingly more legal act that provides each client protection and assurance that their land ownership has obtained utmost legality.

 

The Ilocos region is then a raw venture for real estate developers in the industry. However, this rawness of the region in this industry sounds potentially a big business possibility especially that Metro Manila is becoming overcrowded. Expansions and opening greater heights of this kind of industry have actually been introduced. In the industry, there are already established brokers, and that there have been areas in the region being developed and is continuing to grow.

 

As cited by Riddiough, et. al. (2003), the Ilocos region is yet regarded as a developing region in the country. Definitely, Region I is an agricultural region, but as industrialization goes north, a promise towards bigger and wider offers would surely bring Ilocanos to the so - called better living. Minimal industry and job opportunities could be a manifestation to this. Different projects have been initiated, and are already providing jobs. Sooner or later, the hope of every Ilocano to own a house and lot and other property will be realized. Chances are always bigger when the offer is nearer or closer.

 

The real estate business paved way in the metropolitan area. Likewise, in the sub- urban and rural parts of the archipelago. The Ilocandia finally saw potential in this industry. Each province in the region has its promising quality and strength towards development. Through this industry, further opportunities and better options are likely to be introduced that makes the Ilocandia a better place to live in.

 

According to Cayabyab (2007), Filipinos are known for their frugality, but modern Filipinos who value their security would also spend their money, especially on things which could be seen as a good investment. A house and lot is almost a perfect example for this. A land property which could be converted into an agricultural site or a good site for a business venture is another. It should not then be forgotten that a nation that is able to provide a good shelter to its citizen, as these citizens do have their good source of living embarks a progressive nation. The progress of a country depends on the status and living condition of its citizenry.

 

This study had the primary objective of assessing and evaluating the real estate housing development in Ilocos Sur. The value of assessing and evaluating the real estate housing development in the Ilocos Sur Province is believed to be of great contribution since it gives room for opportunity for businessmen and would-be businessmen who are or will be engaged in the Realty Service Industry to analyze more of the challenges and/or situation of the industry. Seemingly, it benefits those who wanted to engage themselves into such kind of endeavor. From this study, it is beneficial in the sense that added information can be extracted or derived on a book which actually pictured the real estate housing development in the Ilocos Sur area.

 

In this study, the researcher aimed to identify, if there is, what part of the housing development is weak, and which needs to be improved in relation to property development or land use. Whatever was found inefficient and ineffective, this study was geared toward the attainment of providing relevant and pertinent information, useful not only to those who have an interest into this kind of business endeavor, but also to anyone who comes across with it who thinks it would be beneficial.

 

STATEMENT OF THE PROBLEM:

This study assessed the Housing Development in Ilocos Sur and its economic impact.

Specifically, it sought to answer the following questions:

1.     What is the status of housing development in terms of the following:

a.     Level of satisfaction of the homeowners,

b.     Economic policies (interest rates), and

c.     Government policies (demand factor)?

 

2.     What is the economic impact of housing development in terms of the following:

a.     Multiplier effects in businessmen,

b.     Broker’s commission/income, and

c.     Consumer expenditures?

 

3.     Is the economic impact affected by the following:

a.     Level of satisfaction of the homeowners,

b.     Economic policies (interest rates), and

c.     Government policies (demand factor)?

 

METHODOLOGY:

Research Design.:

This research study utilized the descriptive, and correlation methods of research. As cited by Razote (2011), Aquinas mentioned that descriptive method is an organized attempt to analyze, interpret, and make a report of the present status of institutions, programs, or things, group of persons, acts or conditions or any other phenomenon which the researcher wishes to study. The data collected, through the use of questionnaire and evaluation checklist has been supplemented by unstructured interviews. After which, the data collected was tabulated, analyzed, and interpreted to address the problems raised in the study.

Population.:

The respondents of the study were the developers of the real estate business, and the homeowners in the first district of Ilocos Sur including those who were granted a space at the resettlement area provided by the city government of Vigan. Total enumeration was employed wherein all were considered as subject of the study.

 

Table 1: Distribution of the Population of the Respondents of the Study

Real Estate Entity	Developers	Homeowners	Total
1.  Real Estate/ Subdivision	8	193	201
2.  Government Project/ Resettlement Area	1	309	310
3.  Foundation	1	68	69
Total	10	570	580

 

Data Gathering Instrument.:

The primary data gathering tool that was utilized is a checklist questionnaire adapted by the researcher. This was validated by five experts in the field composed of the five (5) different selected Real Estate Owners/Developers in Metro Manila.

 

In this study, there is one set of questionnaire prepared, and it was answered by the real estate owners/ developers, and the same questionnaire to the respective customers/ homeowners including those at the resettlement area.

 

Data Gathering Procedure.:

To gather the necessary data for this study, the researcher asked for the endorsement of the Dean of the Graduate School and the University President of the University of Northern Philippines, to float his questionnaires to the respondents. After permission was obtained, the researcher coordinated to the respondents and then distributed the questionnaires. The accomplished questionnaires were retrieved, tabulated, and was subjected to statistical analyses to answer the problems raised in this study.

 

Statistical Treatment of Data.:

The following statistical tools were used in analyzing the data that was gathered for this research:

1.     Frequency and percentages to describe the demographic variables, economic policies, and government policies;

2.     Mean to determine the level of satisfaction of the homeowners; and

3.     Linear Regression Analysis to determine whether there is a significant relationship among the independent and dependent variables.

 

RESULTS AND DISCUSSION:

Problem 1: The Level of Assessment on the Housing Development:

On Level of Satisfaction of the Homeowners:

When taken as a whole, the status of the housing development has a “very high impact” as backed-up by its overall mean of 4.68. This implies that the level of satisfaction of customers or homeowners of the housing are highly satisfied in terms of the amenities, prevailing market prices and the like.

 

Table 2: Item Mean Ratings Showing the Level of Satisfaction of the Homeowners on the Housing Development

Major Indicators	Owners		Developers		Overall
	x̅	DR	x̅	DR	x̅	DR
1.      There is enough supply of needed real estate houses as defined by the customers’ needs and wants.	5.00	A	4.72	A	4.86	A
2.      Provides additional amenities like clean restrooms within the vicinity, well-ventilated waiting areas, recreation facilities and the like.	5.00	A	4.63	A	4.82	A
3.      There is an influence of the economic growth of the country to the demand of real estate homeowners.	5.00	A	4.51	A	4.75	A
4.      High interest rates and other financial concerns gives restrictions to homeowners.	5.00	A	4.40	A	4.70	A
5.      Alternate houses/products are readily available that suits the demand of the homeowners.	5.00	A	4.41	A	4.70	A
6.      The business area/ vicinity has a major roadway/path across every homeowner’s household.	5.00	A	4.47	A	4.74	A
7.      There is enough payback period for the available mortgage offered to / granted by financial institutions or intermediaries to homeowners.	5.00	A	4.42	A	4.71	A
8.      The charge for interest rates are reasonable but are not lower than the prevailing market rates.	4.90	A	4.42	A	4.66	A
9.      The unemployment of a homeowner is a factor to be considered for long-term purposes of investing affecting much the decision-making of the homeowner whether to continue staying or not.	5.00	A	4.28	A	4.64	A
10.   The physical, living and socioeconomic factors like orientation / position of the housing unit, career reasons, and access to natural light is one of the most important physical factors.	4.60	A	3.77	O	4.19	O
Overall	4.95	VH	4.40	VH	4.68	VH

 

 

Norm:                         Item DR                 Overall DR

             4.21 – 5.00     Always (A)            Very High (VH)

             3.41 – 4.20     Often (O)               High (H)

             2.61 – 3.40     Seldom (Se)           Moderate (M)

             1.81 – 2.60     Sometimes (So)      Low (L)

             1.00 – 1.80     Never (N)              Not (N)

 

On Economic Policies:

It can be vividly shown from the table that when taken as a whole, the status of the real estate housing development in Ilocos Sur along economic policies was assessed to be “very high” as revealed by its over-all mean rating of 4.73. This implies that along all the economic indicators of the real estate housing development is extremely acceptable to its clientele.

 

Table 3: Item Mean Ratings Showing the Level of Assessment on the Housing Development along Economic Policies

Major Indicators	Owners		Developers		As A Whole
	x̅	DR	x̅	DR	x̅	DR
1.  The industry offers attractive price and interest rates for products and services.	5.00	A	4.58	A	4.79	A
2.  Sets pricing policies better with other competitors in the area.	4.90	A	4.51	A	4.70	A
3.  Sets price/rate for preferred clients.	5.00	A	4.45	A	4.72	A
4.  Adjusts price/rate every now and then to satisfy customer objectives/interests.	5.00	A	4.39	A	4.69	A
5.  Special discounts are given to clients who pay regularly or in full and gives premium on special occasions.	4.90	A	4.62	A	4.76	A
Overall	4.96	VH	4.51	VH	4.73	VH

Norm:                                      Item DR                   Overall DR

                4.21 – 5.00               Always (A)              Very High (VH)

                3.41 – 4.20               Often (O)                 High (H)

                2.61 – 3.40               Seldom (Se)             Moderate (M)

 

On Government Policies:

It can be seen from the table that when taken as a whole, the status of the housing development along government policies, as perceived by the owners and homeowners’ respondents, have “very high” as revealed by x̅ = 4.57. This means that the real estate housing abides with the governmental rules and regulations set by the government.

 

Table 4: Item Mean Ratings Showing the Level of Assessment on the Housing Development along Government Policies

Major Indicators	Owners		Developers		As a whole
	x̅	DR	x̅	DR	x̅	DR
1.  The government provides development of new settlement.	4.60	A	4.31	A	4.46	A
2.  There is an upgrading or renewal of areas for priority development either through zonal improvement programs and improvement and resettlement programs.	4.90	A	4.34	A	4.62	A
3.  There is joint venture projects with either the local government units or any of the housing agencies.	4.90	A	4.32	A	4.61	A
4.  There is an accreditation of housing projects engaged and developed for the underprivileged and homeless sector.	4.90	A	4.30	A	4.60	A
5.  There is a system of registration and accreditation of housing project in government resettlement areas, as an additional mode of compliance to balanced housing and in private.	4.90	A	4.47	A	4.69	A
Overall	4.88	VH	4.27	VH	4.57	VH

 

Problem 2: The economic impact of the housing development in terms of the following:

a.     Multiplier effects in businessmen,

b.     Broker’s commission/income, and

c.     Consumer expenditures?

 

Level of Assessment on Economic Impact along Multiplier Effects:

Table 5 illustrates the item mean ratings showing the economic impact of the housing development along multiplier effects. Overall, the level of assessment of economic impact was assessed to have a “very high impact” as indicated by its mean rating of 4.68. This implies that along the major indicators of economic impact towards the organization and its customers, it was perceived to have a great impact. This means that investing in a real estate housing is of great opportunity for all players in the industry.

 

 

Table 5: Item Mean Ratings Showing the Economic Impact on the Housing Development along Multiplier Effects

Major Indicators	Developers		Homeowners		As a Whole
	x̅	DR	x̅	DR	x̅	DR
1.  Presence of less competitors in the same industry gives increased revenue or income to the businessman which allows other aspects of the business/organization to grow.	5.00	A	4.49	A	4.74	A
2.  Profits earned provides incentives for the enterprise to make innovations.	5.00	A	4.45	A	4.72	A
3.  The quality of products and services offered paves way for the organization’s growth	5.00	A	4.44	A	4.72	A
4.  Real estate is an acceptable collateral or security for loan thus it is the most preferred collateral asset and is therefore the major source of capital formation especially for business endeavors.	5.00	A	4.40	A	4.70	A
5.  Real estate triggers income opportunities for various sectors and generates a market for the construction and allied industries.	5.00	A	4.28	A	4.64	A
Overall	5.00	VHI	4.36	VHI	4.68	VHI

 

Economic Impact on the Housing Development along Broker’s Commission/Income:

When taken as a whole, the economic impact on housing along broker’s commission/income was perceived to have a “very high impact” as backed up by its overall mean rating of 4.63. This means that housing provides its broker’s enough compensation and other fringe benefits.

 

Table 6: Item Mean Ratings Showing the Economic Impact on the Housing Development along Broker’s Commission/Income

Major Indicators	Developers		Homeowners		As a whole
	x̅	DR	x̅	DR	x̅	DR
1. Adequate broker’s commission or income sustains employability of the broker.	5.00	A	4.47	A	4.73	A
2. Other fringe benefits helps improve quality of life of the broker.	5.00	A	4.42	A	4.71	A
3. Broker’s commission/income is solely dependent on the number of quotas met.	5.00	A	4.42	A	4.71	A
4. The earnings derived from the commission/income is commensurate to the performance of the broker.	5.00	A	4.28	A	4.64	A
5. Commission/income of the broker gives additional good financial standing.	5.00	A	3.79	O	4.39	A
Overall	5.00	VHI	4.27	VHI	4.63	VHI

 

Economic Impact of the Housing Development along Consumer Expenditures:

Table 7 displays the economic impact of the housing development along consumer expenditures. Overall, the economic impact of the housing development along consumer expenditure was assessed to be at a “very high impact” as revealed by its mean rating of 4.66. This implies that consumer prefers to acquire real estate housing to lessen and save more instead of buying individual acquisition of house and a lot. This means that consumers will able to save more of the expenditures in the acquisition of real estate housing and will able to spend their saved money for other purposes.

 

Table 7 Item Mean Ratings Showing the Economic Impact of the Housing Development along Consumer Expenditures

Major Indicators	Developers		Homeowners		As a whole
	x̅	DR	x̅	DR	x̅	DR
1.  Consumers are able to increase savings as compared to the acquisition of land, building, etc to putting of a new infrastructure	5.00	A	4.47	A	4.73	A
2.  Convenience and satisfaction through proper choice or preference by consumers is maintained	5.00	A	4.42	A	4.71	A
3.  Consumers are able to invest on other preferences because of savings derived from it	5.00	A	4.43	A	4.71	A
4.  Some other priorities are given importance because of less expenditures	5.00	A	4.29	A	4.64	A
5.  The availability of quality and sufficient resources enables the consumer to have lesser expenditures	5.00	A	3.99	O	4.49	A
Overall	5.00	VHI	4.32	VHI	4.66	VHI

 

Problem 3: Is the economic impact affected by the following:

a.     Level of satisfaction of the homeowners,

b.     Economic policies (interest rates), and

c.     Government policies (demand factor)?

 

On Multiplier Effects in Businessmen:

Table 8 exposes the regression analysis of the independent variables on the economic impact along multiplier effects in businessmen. The table further reveals that the combination of the independent variables on the economic impact along multiplier effects in businessmen is significant (F-ratio=17.472, F prob.<.05). This means that all the independent variables are significant along multiplier effects in businessmen of the housing development in Ilocos Sur.

 

Scrutinizing the table it could explain that 8.5 (R² = .085) percent of the variance of the independent variables of the housing development in Ilocos Sur and the remaining 91.5 percent could be due to other factors not considered in this study.

 

Table 8: Regression Analysis of the Independent Variables along Multiplier Effects in Businessmen

Variables	Beta	t-value	t-prob
Level of Satisfaction of Homeowners	.169	4.082*	p<.05
Economic Policies	.109	2.637*	p<.05
Government Policies	.157	3.846*	p<.05

Mult. R: .291 F-ratio: 17.472

R²: ..085 F-prob: .000

 

On Broker’s Commission/Income:

Table 9 unveils the regression analysis of the independent variables along broker’s commission/ income. As shown in the table, it is vividly shown that the combination of the independent variables on the economic impact along broker’s commission/income is significant (F-ratio = 575.788, F prob.<.05).

 

From the same table, it can explain that 59.4 percent of the variance of the independent variables along broker’s commission/income and the remaining 40.6 percent could be due to other factors not considered in this study.

 

Table 9: Regression Analysis of the Independent Variables along Broker’s Commission / Income

Variables	Beta	t-value	t-prob
Level of Satisfaction of Homeowners	.747	27.038*	p<.05
Economic Policies	.015	.561	p>.05
Government Policies	.098	3.598*	p<.05

Mult. R: .771 F-ratio: 575.788

R²: .594 F-prob: .000

 

On Consumer Expenditures:

Table 10 presents the regression analysis of the independent variables on the economic impact along consumer expenditures. The table further divulges that the combination of the independent variables on the economic impact along consumer expenditures is significant (F-ratio = 216.338, F prob.<.05).

 

As reflected from the table it can explain that 53.4 percent of the variance of the independent variables on the economic impact along consumer expenditures and the remaining 46.6 could be due to other factors not considered in this study.

 

 

Table 10: Regression Analysis of the Independent Variables on the Economic Impact along Consumer Expenditures

Variables	Beta	t-value	t-prob
Level of Satisfaction of Homeowners	.719	24.276*	p<.05
Economic Policies	.001	.038	p>.05
Government Policies	.066	2.274*	p<.05

Mult. R: .731 F-ratio: 216.338

R²: .534 F-prob: .000

 

CONCLUSIONS:

From the findings, the following conclusions were drawn:

1.     The local developers have comparative advantage over other business ventures.

2.     The industry contributes to the economic development.

3.     Homeowners are satisfied with the quality of goods and services.

4.     Few number of owners/developers gives higher revenue.

5.     Housing development affects income opportunities.

6.     The broker’s commission/income is adequate that it sustains employability.

 

RECOMMENDATIONS:

Based on the findings and conclusions, the following recommendations are forwarded:

1.     Developers should continue to improve delivery of goods and services.

2.     Other investors should come in to add other players in the industry.

3.     The provincial government must encourage more housing developers.

4.     Owners should give incentives to homeowners.

5.     Owners should provide more affordable housing.

6.     Real estate owners should provide lesser price for low-income earners and beginning families.

 

REFERENCES:

1.        Riddiough, T. J., et. al. (2003). "On demand: Cross-country evidence form Commercial Real Estate Asset Markets." In 8th European Real Estate Society Conference. ERES: Conference. Alicante, Spain.

2.        Cayabyab, M. R (2007). “The Microfinancing Firms in Vigan City”, (Unpublished Master’s Thesis, University of Northern Philippines, Vigan City)

3.        Razote, H. (2011). “The Status and Effectiveness of Microfinance Institutions (MFIs) in Ilocos Sur”, (Unpublished Doctoral Dissertation, University of Northern Philippines, Vigan City)

 

 

Accepted on 24.07.2020           ©AandV Publications All right reserved