the dynamics of real estate prices institute of university of i business and v california at i economic research berkeley fisher center for real estate and urban economics p working paper series working paper no 88 151 the dynamics of real estate prices by these papers are preliminary in nature their purpose is to i e z i d 2f iz e ey bradford case are nottobccited ortluotedin john mq quigley any publication without the ex press permission of the author walter a haas school of business

the role of demand in land re development abstract vacant previously developed land in cities can generate negative externalities on surrounding areas and is often the target of policies to promote re development this paper provides estimates of the price sensitivity of land re development a crucial parameter for the success of these policies my estimates measure how prices affect long run conversion of unused or underused previously developed land in england the empirical strategy uses school test scores and admission district boundaries in a boundary discontinuity design to generate variation in housing demand that is orthogonal to re development costs results show that the probability of re development is effectively sensitive to housing prices estimates indicate that a 1 increase in prices leads to a 0 07 percentage point reduction in the fraction of hectares containing brownfield land price differences or substantial subsidies could lead to a significant amount of re development in the long run this is confirmed by observed land use changes between 2007 and 2011 being disproportionately concentrated in high price areas

distinctively different a new approach to valuing architectural amenities we propose a method to estimate the capitalized value of the architectural design quality of a neighbourhood our economic design premium is identified by spatially differentiating property prices and design quality within neighbourhoods and comparing the differences across neighbourhoods we apply our method to 47 conservation area neighbourhoods in england in which we analyse around 7900 property transactions and interview more than 500 residents we find a capitalization effect of about 25 4 38 7k associated with a one step increase on a five step scale ranging from not at all distinctive to very distinctive our results suggest that this effect is at least partially driven by an architectural externality

infrequent housing adjustment limited participation and monetary policy this paper asks why monetary contractions have strong effects on the housing market the paper presents a model with staggered housing adjustment in which monetary policy has real effects in the absence of any rigidity in producer pricing or wages limited participation in financial markets leads to a rise in the real mortgage rate following an increase in the nominal short rate since households must take on a mortgage to consume housing the rise in the real interest rate reduces the share of residential investment in output

the equilibrium effect of fundamentals on house prices and rents abstract using a dynamic equilibrium model of housing tenure choice with fully specified markets for homeownership and rental properties and endogenous house prices and rents this paper studies the effect of fundamentals on equilibrium house prices and rents lower interest rates relaxed lending standards and higher incomes are shown to account for approximately one half of the increase in the u s house price rent ratio between 1995 and 2006 and to generate the pattern of rapidly growing house prices sluggish rents increasing homeownership and rising household indebtedness observed in the data

residential construction using the urban growth model to estimate housing supply abstract this article presents an empirical model of housing supply derived from urban growth theory this approach describes new housing construction as a function of changes in house prices and costs rather than as a function of the levels of those variables which previous studies have used empirical tests support this specification over the leading alternative models our estimates show that a 10 rise in real prices leads to an 0 8 increase in the housing stock which is accomplished by a temporary 60 increase in the annual number of starts spread over four quarters

redevelopment and the urban land price gradient abstract this paper presents the first careful test of an equilibrium model of urban redevelopment in addition it demonstrates a new methodology for recovering vacant urban land prices in areas that have already been developed using data on single family detached homes sold in vancouver b c we estimate the price of vacant land based on properties that were sold and redeveloped the price of developed land is also estimated based on properties that were sold and not redeveloped various tests overwhelmingly support the hypothesis that housing is redeveloped when the price of vacant land exceeds the price of land in its current use this result provides support for various theoretical models of urban spatial growth and indicates that one can recover vacant urban land prices by examining redeveloped properties

does public insurance crowd out private insurance the cost of expanding public sector health programs depends critically on the extent to which public eligibility will cover just the uninsured or will crowd out existing private insurance coverage we estimate the extent of crowd out arising from the expansions of medicaid to pregnant women and children over the 1987 1992 period we estimate that approximately 50 percent of the increase in medicaid coverage was associated with a reduction in private insurance coverage this occurred largely because employees took up employer based insurance less frequently there is also some evidence that employers contributed less for insurance and that workers dropped coverage of dependents

safe and satisfied external effects of homeownership in rotterdam the article analyses the impact of homeownership on neighbourhood safety and neighbourhood satisfaction using a unique panel dataset for the city of rotterdam the results show that there are significant but economically small effects of homeownership on safety and satisfaction moreover the relation between ownership and satisfaction is significantly moderated by neighbourhood safety the paper examines whether the marginal impact of increases in homeownership on external effects diminish once ownership levels are higher according to the data this seems to be the case the results are robust to alternative specifications the findings provide insights for the evaluation of housing market policies that subsidise or stimulate homeownership

heterogeneous expectations boom bust housing cycles and supply conditions a nonlinear economic dynamics approach abstract we combine a standard stock flow housing market model incorporating explicit relationships between house prices the housing stock and the rent level with a parsimonious expectation formation scheme of housing market investors reflecting an evolving mix of extrapolative and regressive expectation rules the model results in a two dimensional discrete time nonlinear dynamical system based on realistic parameters the model is able to generate endogenous boom bust housing market dynamics with lasting periods of overvaluation and overbuilding we thus exploit our model to investigate how real forces in particular supply conditions interact with expectations driven housing market fluctuations

the effects of potential land development on agricultural land prices abstract we conduct a national scale analysis of the determinants of agricultural land values the theoretical basis for the study is a spatial city model with stochastic returns to future land development the empirical model of agricultural land prices is estimated with a cross section on approximately three thousand counties in the contiguous us the results provide evidence that option values associated with irreversible and uncertain land development are capitalized into current farmland values for each county we decompose the current agricultural land value into components measuring rents from agricultural production and rents from future land development

agricultural land values and the value of rights to future land development we investigate the inuence of fu ture land development on current agricultural land values from a theoretical model of land markets we derive a reduced form expression for agricultural land values in terms of observable variables this result dictates the speci cation of our econometric model and we nd strong sup port for the model in an application to new york state the estimated model together with a spa tial interpolation algorithm is used to generate a surface of estimated development rights values for orange county this approach overcomes several problems that arise with the use of stan dard appraisal methods to value conservation easements jel q24

credit rationing and the demand for owner occupied housing abstract this study applies cross sectional data to test whether default risk induced credit constraints affect the demand for owner occupied housing credit constrained households are argued to exhibit different elasticities of demand for housing than less constrained households housing demand elasticities are then estimated separately for households obtaining va insured and non va loans the government guarantee on va loans insures lenders against default enabling lenders to apply easier nonprice terms of credit results indicate that observed demand elasticities differ significantly across va and conventional mortgage holders that marginal changes in credit constraints affect housing demand and that fha financing mitigates the effect of mortgage constraints

urban decline and durable housing urban decline is not the mirror image of growth and durable housing is the primary reason the nature of decline is so different this paper presents a model of urban decline with durable housing and verifies these implications of the model 1 city growth rates are skewed so that cities grow more quickly than they decline 2 urban decline is highly persistent 3 positive shocks increase population more than they increase housing prices 4 negative shocks decrease housing prices more than they decrease population 5 if housing prices are below construction costs then the city declines and 6 the combination of cheap housing and weak labor demand attracts individuals with low levels of human capital to declining cities

causes of sprawl a portrait from space we study the extent to which u s urban development is sprawling and what determines differences in sprawl across space using remote sensing data to track the evolution of land use on a grid of 8 7 billion 30 30 meter cells we measure sprawl as the amount of undeveloped land surrounding an average urban dwelling the extent of sprawl remained roughly unchanged between 1976 and 1992 although it varied dramatically across metropolitan areas ground water availability temperate climate rugged terrain decentralized employment early public transport infrastructure uncertainty about metropolitan growth and unincorporated land in the urban fringe all increase sprawl

quasi experimental evidence on the effect of aircraft noise on apartment rents inferring the implicit price of an environmental good hinges on ceteris paribus conditions that are often hard to justify this paper uses an unexpected change in flight regulations as source of exogenous variation and identifies aircraft noise effects from price adjustments in the market for rental apartments controlling for spatial and apartment heterogeneity we find that aircraft noise reduces apartment rents by about 0 5 per decibel our results indicate i that noise discounts are overestimated in cross sectional studies because aircraft noise tends to be negatively correlated with omitted neighborhood and housing amenities and ii that noise effects are unlikely to be constant over the entire noise range

are private markets and filtering a viable source of low income housing estimates from a repeat income model while filtering has long been considered the primary mechanism by which markets supply low income housing direct estimates of that process have been absent this has contributed to doubts about the viability of markets and to misplaced policy i fill this gap by estimating a repeat income model using 1985 2011 panel data real annual filtering rates are faster for rental housing 2 5 percent than owner occupied 0 5 percent vary inversely with the income elasticity of demand and house price inflation and are sensitive to tenure transitions as homes age for most locations filtering is robust which lends support for housing voucher programs jel r21 r31 r38

testing the efficiency of the norwegian housing market abstract the question of whether or not the housing market is efficient is posed by an increasing number of economists policymakers homebuyers and homesellers this article tests the efficiency hypothesis on data from the housing market in oslo over the period 1991 2002 employing the case shiller time structure test on a repeat sales house price index and returns to housing we demonstrate that both the repeat sales house price index and returns contain time structure and that the housing market is characterized by inefficiencies we also find surprisingly that the housing market consistently yields higher appreciation at lower volatility than the stock market over the period

preferences for domestic fuel analysis with socio economic factors and rankings in kolkata india abstract the choice of domestic fuel is a matter of great concern for households and policy makers in india this paper investigates the demand for domestic fuels when households face four choices fuelwood coal kerosene and lpg the study is based on a survey of 500 households in kolkata india the demand estimates are conducted using a two stage process where the first stage investigates choice and the second the quantity used determinants of fuel demand are identified and their relative importance shown extending the study the paper also analyses the choice of the main cooking fuel in terms of the households stated rankings of six fuels for five attributes the policy discussion indicates that subsidies have less potential to reduce polluting fuels such as coal and fuelwood due to weak cross price elasticities while increased availability of lpg and potentially also increased awareness of indoor air pollution have greater prospect

a nation of gamblers real estate speculation and american history the great housing convulsion that buffeted america between 2000 and 2010 has historical precedents from the frontier land boom of the 1790s to the skyscraper craze of the 1920s but this time was different there was far less far less real uncertainty about fundamental economic and geographic trends making the convulsion even more puzzling during historic and recent booms sensible models could justify high prices on the basis of seemingly reasonable projections about stable or growing prices the recurring error appears to be a failure to anticipate the impact that elastic supply will eventually have on prices whether for cotton in alabama in 1820 or land in las vegas in 2006 buyers don t appear to be irrational but rather cognitively limited investors who work with simple heuristic models instead of a comprehensive general equilibrium framework low interest rates rarely seem to drive price growth under priced default options are a more common contributor to high prices the primary cost of booms has not typically been overbuilding but rather the financial chaos that accompanies housing downturns

bi criteria utility functions analytical considerations and implications in the short run labour market abstract an analytical framework to address the optimisation of bi criteria utility functions u s b defined in the sales revenue profit space is presented some of the macroeconomics implications underlying these kinds of utility functions are elicited thus the short run aggregate demand for labour in a context where firms maximise a utility function u s b is obtained and compared with the classic demand for labour predictions derived from a profit maximisation behaviour

site density restrictions measurement and empirical analysis abstract restrictions on the density at which development can occur are a central tool of land use regulation yet they are understudied in the empirical literature in this paper we present a methodology to identify how much restrictions on the ratio of building space to lot area constrain developers our approach generates a measure of the distortion from the private optimum caused by restrictions as a function of land prices and the maximum allowed ratio of floor space to lot area we use this methodology to examine how the set of incentives facing different levels of local government in shanghai china affects density constraints on redevelopment sites in the city s emerging real estate market

the contagion effect of foreclosed properties although previous research shows that prices of homes in neighborhoods with foreclosures are lower than those in neighborhoods without foreclosures it remains unclear whether the lower prices are the result of a general decline in neighborhood values or whether foreclosures reduce the prices of nearby non distressed sales through a contagion effect we provide robust evidence of a contagion discount by simultaneously estimating the local price trend and the incremental price impact of nearby foreclosures at its peak the discount is roughly 1 per nearby foreclosed property the discount diminishes rapidly as the distance to the distressed property increases the contagion discount grows from the onset of distress through the foreclosure sale and then stabilizes this pattern is consistent with the contagion effect being the visual externality associated with deferred maintenance and neglect

do low income housing subsidies increase the occupied housing stock abstract a necessary condition for justifying a policy such as subsidized low income housing either via tenant based rental assistance or construction of public or private projects is that it has a real effect on market outcomes in this paper we examine one aspect of the real effect of subsidized housing does it increase the housing stock if subsidized housing raises the quantity of occupied housing per capita either more people are finding housing or they are being housed less densely on the other hand if subsidized housing merely crowds out equivalent quality low income housing that otherwise would have been provided by the private sector the housing policy may have little real effect on housing consumption using both census place and msa level data from the decennial census and from the department of housing and urban development we ask whether housing markets with more subsidized housing also have more total housing after accounting for housing demand we find that government financed units raise the total number of units in a market although on average one government subsidized unit adds only one third to one half of a unit to the total housing stock there is less crowd out in more populous markets and more crowd out in places where there is less excess demand for subsidized housing as measured by the number of government financed units per eligible person tenant based housing programs such as section 8 certificates and vouchers seem to be more effective than project based programs at targeting subsidized housing units to people who otherwise would not have their own

wholesale pricing and evolutionarily stable strategies of retailers with imperfectly observable objective abstract this paper develops a one population indirect evolutionary game model of a supply chain with one manufacturer supplier and many a sufficiently large number of retailers to study how the retailer s marketing objective depends on the wholesale price its observability the error probability of the observed result on the rival s preference the market scale and the retailer s bargaining power this paper also presents an algorithm for computing the optimal wholesale price of the manufacturer we find that the profit revenue maximization behavior is an evolutionarily stable marketing strategy if the wholesale price is sufficiently high low given an appropriate wholesale price the revenue maximization behavior coexists with the profit maximization behavior in the retailers population the larger the market scale the stronger the motivation of the retailer to take profit maximization behavior due to a higher wholesale price the cross effects of the retailer s reservation payoff and the other factors should be considered in the decision process

dissemination of cooking energy alternatives in india a review abstract energy requirements for cooking account for 36 of total primary energy consumption in india the rural and urban populaces depend mainly on non commercial fuels to meet their energy needs diverse urban growth patterns have led to structural changes in economy and have important ramifications on energy consumption in household sector it is observed that india follows income based ladder starting with fuelwood and ending with sophisticated fuels like liquefied petroleum gas lpg and electricity this paper discusses cooking energy dissemination in the country with an objective of understanding the underlying socioeconomic factors governing the utilization of various fuels energy carriers in cooking the diffusion of renewable energy devices is observed to be far below their estimated potential policy interventions required for better dissemination of renewable energy based devices are also discussed

depreciation of housing capital maintenance and house price inflation estimates from a repeat sales model abstract the rate at which physical capital depreciates is fundamental to investment in the economy nevertheless although housing capital accounts for one third of the total capital stock the rate at which housing capital depreciates has only rarely been directly estimated in part because prior studies do not control for maintenance for that same reason widely publicized measures of house price appreciation overstate the capital gain from homeownership using data from the american housing survey we examine these issues over the 1983 to 2001 period results indicate that gross of maintenance housing depreciates at roughly 2 5 percent per year while net of maintenance housing depreciates at approximately 2 percent per year moreover although the typical home appreciated at an annual real rate of roughly 0 75 percent after allowing for depreciation and maintenance the average homeowner experienced little capital gain

spatial growth and redevelopment with perfect foresight and durable housing abstract in this paper i present a theoretical model of the spatial growth of an urban area with durable housing i combine several assumptions that typically complicate the analysis i housing developers have perfect foresight ii the initial development and many waves of redevelopment are considered in each developer s plan and iii the closed city assumption is made so that the time path of population is exogenous and that of consumer utility is endogenous i still obtain explicit solutions for the spatial pattern of urban growth and for the timing of the initial residential development and each successive redevelopment at each distance from the urban center i compare perfect foresight growth to growth with static expectations and i examine the comparative statics of both

teardowns and land values in the chicago metropolitan area an empirical model of residential housing demolitions and the redevelopment process in the chicago metropolitan area supports the theoretical prediction that the sales price of teardown property is approximately equal to its land value we control for sample selection bias associated with non random demolition permit applications using a probit model that accounts for misclassification of the dependent variable the probit models provide statistically significant evidence of misclassification and suggest that prime teardown candidates are small older homes near public transportation and traditional village centers

public radio in the united states does it correct market failure or cannibalize commercial stations because broadcasters can capture only part of the value of their product as revenue there is the potential for a classic problem of underprovision whether public support corrects a market failure depends on whether the market would have provided similar services in the absence of public broadcasting we address these questions by asking whether public and commercial classical stations compete for listening share and revenue as well as whether public stations crowd out commercial stations we find evidence that public broadcasting crowds out commercial programming in large markets particularly in classical music and to a lesser extent in jazz 1999 elsevier science s a all rights reserved

hedonic pricing with redevelopment options a new approach to estimating depreciation effects abstract the standard hedonic model of durable assets is a special case of a more general model that contains two additive terms 1 use value of the existing hedonic vector and 2 the value of the option to reconfigure hedonic characteristics one empirical implication is that the two parts of value are related e g use value increases with interior area whereas option value decreases with intensity the ratio of structure value divided by land value increases in building age reduce use value but increase option value data from greenwich connecticut indicate that intensity has the expected negative effect coefficients on building age are shown to be better measures of depreciation when intensity variables are included in the regression

long term earnings and employment effects of housing voucher receipt abstract using a propensity score matching approach coupled with difference in differences regression analysis we estimate the effect of housing voucher receipt on the employment and earnings of a large longitudinal sample of low income families for 6 years following voucher receipt our results indicate that voucher receipt has little effect on employment but a negative effect on earnings the negative earnings effect is largest in the years immediately following initial receipt and fades out over time in addition we find that the pattern of recipient earnings responses to voucher receipt differs substantially across demographic subgroups several robustness tests are run to support the reliability of our findings we discuss the implications of our findings for research and policy

old homes externalities and poor neighborhoods a model of urban decline and renewal abstract this paper investigates urban decline and renewal in the united states using three panels that follow neighborhoods on a geographically consistent basis over extended periods of time findings indicate that change in neighborhood economic status is common averaging roughly 13 percent per decade roughly two thirds of neighborhoods studied in 1950 were of quite different economic status fifty years later panel unit root tests for 35 msas indicate that neighborhood economic status is a stationary process consistent with long running cycles of decline and renewal in philadelphia county a complete cycle appears to last up to 100 years aging housing stocks and redevelopment contribute to these patterns as do local externalities associated with social interactions lower income neighborhoods appear to be especially sensitive to the presence of individuals that provide social capital many of the factors that drive change at the local level have large and policy relevant effects

reducing subsidies on household fuels in india how will it affect the poor kerosene and lpg are widely used in households in india for lighting and cooking these fuels have historically been subsidized as part of the restructuring of the energy sector the government is committed to limiting these subsidies this paper examines the impact of reducing energy subsidies on the welfare of the poor the paper uses data from nationally representative surveys of over 100 000 households the paper concludes that the case for reducing lpg subsidies is strong although the kerosene subsidy is an inefficient means of subsidizing fuel use by the poor reduction in it will need to be supported by other policies that would limit the adverse impacts

distributional implications of government guarantees in mortgage markets we analyze the removal of the credit risk guarantees provided by the government sponsored enterprises gses in a model with agents heterogeneous in income and house price risk we find that wealth inequality increases driven by higher mortgage spreads and housing rents housing holdings become more concentrated foreclosures fall the removal benefits high income households while hurting low and mid income households renters and highly leveraged mortgagors with conforming loans gse reform requires compensating transfers sufficiently high elasticity of rental supply or linking gse reform with the elimination of the mortgage interest deduction

housing investment in the united states a supply determined model of housing investment is estimated from quarterly data over the 1963 83 period the model is built on dynamic marginal cost pricing considerations and allows short and long run supply elasticities to differ these are estimated as 1 0 and 3 0 respectively but most of the long run response occurs within 1 year rapid adjustment speed and the sizable long run elasticity of supply are important factors in understanding the volatility of housing investment the data also suggest some anomalies in the expected present value theory of asset pricing for housing capital

residential buildings and the cost of construction new evidence on the efficiency of the housing market present value studies of asset market efficiency are controversial because they compare asset prices to unobserved discounted streams of future rents as an alternative if housing markets are efficient then the price of residential capital or buildings should satisfy the following two conditions i deviations between new building prices and construction costs should disappear faster than construction lags and have no effect on construction and ii temporary building price shocks should dissipate at a similar rate for different vintage buildings results from an error correction model support both hypotheses for single family housing in vancouver british columbia this implies that the implicit market for residential buildings is efficient and that any inefficiencies in the housing market must lie in the market for land itself

speculative bubble spillovers across regional housing markets in this paper we determine whether speculative bubbles in one region in the united states can lead bubbles to form in others we first apply a regime switching model to determine whether speculative bubbles existed in the u s regional residential real estate markets our findings suggest that the housing markets in five of the nine census divisions investigated were characterized by speculative bubbles we then examine the extent to which bubbles spill over between neighboring and more distant regions finding that the transmission of speculative bubbles and nonfundamentals between regions is multidirectional and does not depend on contiguity or distance

a model for cost benefit analysis of cooking fuel alternatives from a rural indian household perspective abstract nearly half of the world s population does not have access to cleaner cooking fuels and this is attributed to several things including the lack of resources fuel infrastructure production and distribution purchasing power poverty relevant policies and a combination of these reasons a household s fuel choice aims to minimize cost and maximize benefit both of which are intricate functions of many factors the factors influencing a household s fuel preference and how manipulating these factors such as subsidies improved distribution networks and user awareness will affect fuel preference is reported a cost benefit analysis cba model was developed to study the fuel preferences of rural indian households seven cooking fuels biomass wood and crop residue dung charcoal liquefied petroleum gas lpg biogas kerosene and electricity were ranked in order of household preference various scenarios were considered to demonstrate the sensitivity of fuel preference to multiple factors such as subsidies and improvement in cooking technology results obtained from the model demonstrated strong agreement with the current fuel usage pattern in rural india the model was then applied to compare traditional cookstoves tcs to non subsidized improved cookstoves ics the benefit to cost ratio of solid fuels when used in ics was lower than that when used in tcs a similar trend was observed for fully subsidized ics indicating that price is not the only obstacle to the adoption of an ics sensitivity analysis was performed to demonstrate the utility of this cba model in framing policies to promote fuel transition in rural india although providing subsidies on lpg and electricity can make these cleaner fuels an attractive option biomass will remain a household s preferred fuel unless distribution networks and infrastructure is developed to ensure their uninterrupted supply and accessibility

the price of residential land for counties zip codes and census tracts in the united states abstract data from millions of appraisals in 2012 2019 are used to estimate residential land prices the share of house value attributable to land and related statistics down to the census tract level for areas that include the vast majority of u s population and single family housing the results confirm predictions about land prices from canonical urban models over 2012 2019 we show that land prices rose faster than house prices in large metro areas boosting the land share of house value while the land share fell in smaller metros the data are available for download at https www fhfa gov papers wp1901 aspx

the effects of low income housing tax credit developments on neighborhoods abstract this paper evaluates the impacts of new housing developments funded with the low income housing tax credit lihtc the largest federal project based housing program in the u s on the neighborhoods in which they are built a discontinuity in the formula determining the magnitude of tax credits as a function of neighborhood characteristics generates pseudo random assignment in the number of low income housing units built in similar sets of census tracts tracts where projects are awarded 30 higher tax credits receive approximately six more low income housing units on a base of seven units per tract these additional new low income developments cause homeowner turnover to rise raise property values in declining areas and reduce incomes in gentrifying areas in neighborhoods near the 30th percentile of the income distribution lihtc units significantly crowd out nearby new rental construction in gentrifying areas but do not displace new construction in stable or declining areas

swings in commercial and residential land prices in the united states abstract we use a large dataset of land sales dating back to the mid 1990s to construct land price indexes for 23 msas in the united states and for the aggregate of those msas the price indexes show a dramatic increase in both commercial and residential land prices over several years prior to their peak in 2006 2007 and a steep descent since then these fluctuations have exceeded those in well known indexes of home prices and commercial real estate prices because those indexes price a bundle of land and structures this comparison implies that land prices have been more volatile than structures prices over this period this result is a key element of the land leverage hypothesis which holds that home prices and commercial property prices will be more volatile all else equal in areas where land represents a larger share of real estate value

crowd out effects of place based subsidized rental housing new evidence from the lihtc program abstract since its inception in 1987 the low income housing tax credit lihtc program has ballooned into the largest ever source of subsidized construction of low income housing in the united states accounting for one third of all recent multi family rental construction this paper examines the crowd out effects of this increasingly important source of low moderate income housing to do so we analyze the impact of lihtc construction at three different levels of geography msa county and 10 mile radius circles this allows us to employ increasingly extensive geographic fixed effects that help to difference away unobserved factors political variables are also used as instruments to further facilitate identification in all of our models iv estimates yield substantially greater crowd out than ols confirming the endogenous attraction of lihtc development to areas ripe for new construction our most robust iv estimates indicate that nearly 100 of lihtc development is offset by a reduction in the number of newly built unsubsidized rental units although the confidence band around this point estimate allows for less dramatic assessments additional estimates suggest that lihtc development has a much more moderate impact on construction of owner occupied housing but these estimates are imprecise overall while lihtc development may well affect the location of low moderate income rental housing opportunities our estimates suggest that the impact of the program on the number of newly developed rental housing units appears to be small

leverage and the foreclosure crisis how much of the foreclosure crisis can be explained by the large number of high leverage mortgages originated during the housing boom in our model heterogeneous households select from mortgages with different down payments and choose whether to default given income and housing shocks the use of low down payment loans is initially limited by payment to income requirements but becomes unrestricted during the boom the model approximates key housing and mortgage market facts before and after the crisis a counterfactual experiment suggests that the increased number of high leverage loans originated prior to the crisis can explain over 60 percent of the rise in foreclosure rates

understanding the solar home price premium electricity generation and green social status this study uses a large sample of homes in the san diego area and sacramento california area to provide some of the first capitalization estimates of the sales value of homes with solar panels relative to comparable homes without solar panels although the residential solar home market continues to grow there is little direct evidence on the market capitalization effect using both hedonics and a repeat sales index approach we find that solar panels are capitalized at roughly a 3 5 premium this premium is larger in communities with a greater share of college graduates and of registered prius hybrid vehicles

housing price bubbles new supply and within city dynamics abstract although there is broad recognition that cities differ in their tendency to experience house price bubbles most studies assume away any possibility of within city heterogeneity in response to a bubble we develop a model that suggests that this assumption may be appropriate when markets are rising but can be far from reality on the bust side of a bubble during a housing boom new construction and related supply adjustments by developers ensure stable relative prices between low and high quality segments of the housing market on the bust side of a bubble however reduced housing starts allow demand side forces and mortgage default to create pressure for relative prices to diverge across market segments absent a change in technology as markets recover and new construction rebounds relative prices should revert back to pre crash levels evidence based on 2000 2013 single family home sales in phoenix arizona supports this modeling framework additional evidence also suggests that high rates of mortgage default contributed to divergence in relative prices when markets crashed

option value and the price of teardown properties abstract the introduction of uncertainty over the future price of structural capital into a model of teardowns implies a value to delaying the demolition vs preservation decision and that the market price of a redeveloped property may increase with its quantity of structural capital using data from an active teardown market we test the model s prediction that hedonic price function coefficients depend on the expected time between sale and demolition as predicted structural variables have significant effects on the sales prices of both teardown and non teardown properties and the effects are generally much larger the lower the estimated teardown probability

do the gses expand the supply of mortgage credit new evidence of crowd out in the secondary mortgage market abstract the dramatic government takeover of fannie mae and freddie mac in september 2008 was motivated in part by a desire to ensure a continued flow of credit to the mortgage market this study examines a closely related issue the extent to which gse activity crowds out mortgage purchases by private secondary market intermediaries evidence of substantial crowd out suggests that government support for the gses may be less warranted whereas the absence of crowd out implies that gse loan purchases enhance liquidity using 1994 2008 hmda data for conventional conforming sized loans three distinct periods with regard to gse crowd out are apparent from 1994 to 2003 the share of loans sold to the secondary market increased from 60 to over 90 private sector and gse market shares of loan purchases were roughly similar for most market segments and iv estimates indicate relatively little gse crowd out of private secondary market purchases from 2004 to 2006 private loan purchases boomed and dominated those of the gses while iv estimates indicate crowd out jumped to 50 at the peak of the boom this is especially true in the market for home purchase as opposed to refinance loans with the crash in housing and mortgage markets in 2007 private sector intermediaries pulled back the gses regained market share and evidence of gse crowd out disappeared in both the home purchase loan and refinance markets these patterns suggest that the degree of gse crowd out varies with market conditions and that the federal takeover of fannie mae and freddie mac likely served to enhance liquidity to the mortgage market during the 2007 2009 financial crisis

a residence time model of housing markets abstract this paper estimates a semi markov model of housing markets in which families move from one home to another spend a random amount of time in each home and choose whether to own or to rent at each move limiting conditions of the semi markov process are used to characterize the steady state frequency of owner occupied housing and to simulate the impact of changes in housing tax policy this approach differs markedly from previous studies of housing tax policy which focus on the entire population as opposed to the movers and ignore the effect of household residence times see king 1980 rosen 1979 white and white 1977 or laidler 1969 residence times further influence the analysis by affecting the relative cost of owning to renting in the tenure choice model homeowners pay legal and realtor fees at the time they move out of their homes which renters do not have to pay the discounted value of these fees declines with length of stay and provides a structural explanation of why families with longer residence times have a greater propensity to own results from the empirical analysis suggest that the semi markov model closely predicts conditions in the united states and provide important insights into the effects of housing tax policy residence times are also found to influence household tenure choice through their impact on the discounted legal and realtor fees paid by homeowners

property tax capitalization in a model with tax deferred assets standard deductions and the taxation of nominal interest previous property tax capitalization studies assume that families itemize that they save in taxable assets and that real interest income is taxed however many families do not itemize many families invest in tax deferred assets and nominal interest income is taxed as a consequence prior studies likely misspecify the property tax capitalization equation for roughly ninety percent of their samples taking federal tax provisions into account increases the precision of our estimated capitalization rate in addition our results suggest that biases in prior studies likely contribute to the variety of capitalization estimates in the literature

crowding out effects of affordable and unaffordable housing in china 1999 2010 using panel data on housing construction this article examines the crowding out effects of affordable and unaffordable housing in china from 1999 to 2010 applying a dynamic panel model allows us to examine the dynamic interactions between affordable and unaffordable housing constructions when controlling for region specific fixed and time specific effects we analyse whether affordable unaffordable housing construction has changed in response to the past and contemporaneous construction of unaffordable affordable housing our empirical results reveal an asymmetric crowding out pattern between affordable and unaffordable housing we also observe that when urbanization rate is lower than 57 39 unaffordable housing construction crowds out affordable housing construction moreover the crowding out effect of unaffordable housing on affordable housing decreases with rising urbanization rates

relative consumption of housing marginal saving subsidies and income taxes as a second best policy this paper analyzes whether marginal taxation of labor and capital income are useful second best instruments for internalizing the externalities caused by conspicuous housing consumption when the

cluster sample methods in applied econometrics inference methods that recognize the clustering of individual observations have been available for more than 25 years brent moulton 1990 caught the attention of economists when he demonstrated the serious biases that can result in estimating the effects of aggregate explanatory variables on individual specific response variables the source of the downward bias in the usual ordinary least squares ols standard errors is the presence of an unobserved state level effect in the error term more recently john pepper 2002 showed how accounting for multi level clustering can have dramatic effects on t statistics while adjusting for clustering is much more common than it was 10 years ago inference methods robust to cluster correlation are not used routinely across all relevant settings in this paper i provide an overview of applications of cluster sample methods both to cluster samples and to panel data sets

persistence in industrial policy impacts evidence from depression era mississippi this paper studies the effects of a large scale industrial policy implemented in 1930s mississippi on contemporaneous and modern day labor market outcomes attracted by unprecedented government incentives under mississippi s balance agriculture with industry bawi program 13 large manufacturing plants established operations in the state between 1936 and 1940 using difference in differences and synthetic control matching techniques i find that counties that received these plants experienced an over 15 increase in female labor force participation on average in the short run moreover these effects persisted decades into the future well after many of the original companies shut down i also find suggestive evidence of an increase in educational attainment among women in counties where bawi investment occurred the results highlight the potential for even transitory government interventions to have long lived effects on labor markets

non temporal components of residential real estate appreciation this paper separates the components of capital appreciation returns in an asset market into fixed and stochastic portions it proposes a control for the problem of fixed components in the capital appreciation return used in transactions based return estimates we find a consistent bias in the index resulting from repeat sales regressions which may be eliminated through simple methods the sign and magnitude of the bias as well as its systematic variation across property suggest that it is caused by incremental home improvements as well as by price risk we propose a maximum likelihood method for estimating the first and second moments of the fixed and temporal components of real estate returns that relies upon relatively small samples copyright 1995 by mit press

spatial housing economics a survey this introduction to the virtual special issue surveys the development of spatial housing economics from its roots in neoclassical theory through more recent developments in social interactions modelling and touching on the role of institutions path dependence and economic history the survey also points to some of the more promising future directions for the subject that are beginning to appear in the literature the survey covers elements of hedonic models spatial econometrics neighbourhood models housing market areas housing supply models of segregation migration housing tenure subnational house price modelling including the so called ripple effect and agent based models possible future directions are set in the context of a selection of recent papers that have appeared in urban studies nevertheless there are still important gaps in the literature that merit further attention arising at least partly from emerging policy problems these include more research on housing and biodiversity

loss severities on residential real estate debt during the great recession abstract this study develops estimates of expected loss severities on mortgage exposures using data from florida during the great recession this paper marks the first attempt at addressing sample selectivity in the context of loss models we also construct measures of home equity that are more accurate than those employed in previous studies we find that failing to address sample selection and the use of noisy equity measures in loss models can bias loss estimates significantly we also find significantly higher loss severities and a greater sensitivity of loss severity to equity than what previous studies report

managing urban land the case for urban partnership zones multiple ownership of land can act as a significant barrier to brownfield redevelopment despite renewed interest in compulsory purchase it is unlikely to become the normal remedy for multiple ownership owing to its cost and complexity drawing on international experience and recent research this article proposes the concept of an urban partnership zone in which existing landowners would be entitled to participate alongside the local authority and a chosen development partner in a joint venture redevelopment company combined with greater planning certainty and other benefits this innovation would enable the development process to operate more rapidly without immediate compulsory purchase

teaching new markets old tricks the effects of subsidized investment on low income neighborhoods abstract this paper examines the effects of investment subsidized by the federal government s new markets tax credit nmtc program which provides tax incentives to encourage private investment in low income neighborhoods i identify the impacts of the program by taking advantage of a discontinuity in the rule determining the eligibility of census tracts for nmtc subsidized investment using this discontinuity as a source of quasi experimental variation in commercial development across tracts i find that subsidized investment has modest positive effects on neighborhood conditions in low income communities though spillovers appear to be small and crowd out incomplete the results suggest that some of the observed impacts on neighborhoods are attributable to changes in the composition of residents as opposed to improvements in the welfare of existing residents

house prices and risk sharing homeowners in the panel study of income dynamics are able to maintain a high level of consumption following job loss or disability in periods of rising local house prices while the consumption drop for homeowners who lose their job in times of lower house prices is substantial these results are consistent with homeowners being able to access wealth gains when housing appreciates as witnessed by their ability to smooth consumption more than renters a calibrated model of endogenous homeownership and consumption is able to reproduce the patterns in the data quite well and provides an interpretation of the empirical results

changes in the distribution of house prices over time structural characteristics neighborhood or coefficients quantile hedonic house price function estimates imply that appreciation rates were higher between 1995 and 2005 for high priced homes in chicago decompositions of temporal changes in the house price distribution suggest that the types of homes sold and their location do not account for the change in the price distribution rather higher appreciation rates for high priced homes are explained by differences in the quantile regression coefficients over time

the market price of low income housing tax credits abstract the low income housing tax credit lihtc program awards a subsidy to private developers who construct and operate housing units with income targeted rent controls for at least 15 years the program allocated 6 6 billion to developers in 2006 and over 1 6 million units have been subsidized under the program since its inception in 1987 a historical literature suggests place based housing subsidies such as the lihtc program will be more expensive in providing the same level of housing support to the poor than tenant based strategies i e housing vouchers this paper uses an administrative data series of lihtc subsidized properties in california to show the program encourages developers to construct housing units that are an estimated 20 more expensive per square foot than average industry estimates it is additionally shown that due to liquidity constraints faced by lihtc primary developers in how the subsidy is allocated virtually all developers sell the tax credits at a substantial discount below their statutory value immediately after construction this price is estimated to be 0 73 per 1 of tax credit or 1 8 billion annually as compared to alternatively allocating a lump sum grant to developers

extremely low income households housing affordability and the great recession the effects of the great recession on housing equity and homeownership have been well documented however we know little about how rental households fared and the efficacy of housing subsidies in addressing affordability gaps this paper examines the extent to which rental housing became less affordable for extremely low income eli households those earning less than 30 of the area median income ami i then run regression models to determine the local characteristics most strongly associated with larger affordability gaps with a focus on whether housing subsidies are effective at combating such gaps rental affordability gaps became more pronounced during the great recession in nearly 70 of the counties in my sample there was an increase from 2007 to 2010 in the number of eli households per affordable rental unit across the country the increase was 17 a dramatic increase in only three years there is considerable variation across the country with acute affordability crises often concentrated in the south particularly florida regression models provide compelling evidence that housing vouchers public housing and project based section 8 subsidies play an important role in limiting the extent to which large numbers of eli households are competing for a shortage of low cost rental units however these programmes do not respond quickly to local needs such as those brought about by the great recession a pilot study where local housing authorities had funding to be more agile and responsive would be an important step toward crafting better policy

on the price of land and the value of amenities a house represents not only a bundle of structural characteristics but also a set of location specific characteristics adding locational coordinates and site area to other house characteristics makes it possible to estimate a land rent surface as well as thle hedonic prices attached to local patterns of land use and other neighbourhood characteristics one can then estimate how the value of such location specific characteristics are capitalized into land prices this analysis illustrated with estimates based on data from two british towns has a number of wider implications it generates a more parsimonious method of estimating amenity values it also reveals likely systematic biases produced by conventional hedonic studies which exclude land and location finally it clarifies the conceptual definition of land and suggests that monocentric models can perform well despite recent criticism

research on china s rural household energy consumption household investigation of typical counties in 8 economic zones abstract rural household energy consumption is an important component of national energy consumption and plays an important role in rural social and ecological environment developments in this paper energy consumption of 1440 households in 8 typical counties of 8 china s economic zones was investigated the investigation data analysis revealed significant difference of different economic zones in rural household energy consumption level and structure for 8 studying counties the annual average energy consumption per capita was 26 7 gj 10 4 gj the lowest shanghang county and 86 6 gj the highest shulan county in energy consumption straw biogas fuel wood and electricity accounted for 44 33 23 13 12 79 and 9 61 respectively rural families with high incomes preferred commercial energies e g electricity and liquefied petroleum gas lpg to biomass energy e g straw and fuel wood the traditional biomass energy is still the main energy source for china s rural household research results provide references to understand current situations and future development of china s rural household energy consumption and formulate related energy and environmental policies