How Inheritance Affects the Real
Estate Market: Evidence fromtransaction and registry data
Prepared for meeting at 不動産経済分析研究会
March 25, 2016

Takeshi Mizuta, Chihiro Shimizu, Iichiro Uesugi

1INTRODUCTION

2Research questions• How do “exogenous” supply shocks affect the real estatemarket?
– Supply of credit, geographical constraint, regulation and etc.

• What is the impact of the population aging?
– Japan is a front‐runner as a graying society and expected to facea substantial reduction of demand for real estate (Assetmeltdown)• How about inheritance?
– Inheritance occurs to everyone but hard to predict when
– Growing number of inheritance in Japan as a result of aging– It is frequently pointed out that many heirs sell real estate
properties shortly after inheritance3

Number of inheritance of real estate in Japan
Entire country (land)

Entire country (buildings)
160,000

900,000
880,000
860,000
840,000
820,000
800,000
780,000
760,000
740,000
720,000
700,000

150,000
140,000
130,000
120,000
110,000

Inheritance(incidents)

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

100,000

Inheritance(incidents)

Tokyo (land)Tokyo (Buildings)

65,00063,00061,00059,00057,00055,00053,00051,00049,00047,00045,00035,00034,00033,00032,00031,00030,00029,00028,00027,00026,00025,000
2006

2007

2008

2009

2010

2011

Inheritance (incidents)

2012

2013

2014

2006

2007

2008

2009

2010

2011

2012

2013

2014

Source: Registry Statistics by the Ministry of Justice4

Inheritance (incidents)

What we do• Focus on inheritance of real estate properties andrelated tax obligations and incentives• Examine how they affect real estate prices throughincreased supply– First, examine the extent to which inheritance stimulates
sales of real estate– Second, investigate how much exogenous supply shocks
decrease real estate prices after controlling for a numberof property characteristics including aging population ratio• For the above purposes, combine two massive datasetson real estate transactions and registries in 2000‐2014
5

Related literature•

Impact of exogenous shocks on the real estate market– Exogenous variation in the credit supply• Favara and Imbs (2015)– Exogenous variation in the geographical constraint and regulation for landdevelopment• Saiz (2010); Hilber and Vermeulen (2014)

•

We study a different type of exogenous supply shocks: sales of real estate
induced by inheritance
Inheritance is anticipated but cannot be avoided

Effect of taxation– Transaction tax• Best and Kleven (2015): Bunching of real estate transactions around the threshold tax
rate– Capital gain tax• Yamazaki (1996); Yamazaki and Idee (1997): Lock‐in effect of real estate transactions• Cunningham and Engelhardt (2008); Shan (2011)



•We study the impact of inheritance tax and capital gain tax

Asset meltdown– Adverse effect of aging on the demand for real estate• Mankiw and Weil (1989); Nishimura and Takats (2012)

We focus on the effect of aging but on the supply side of real estate market
We control for the demand side by employing the population aging ratio
6

INHERITANCE, TAX PROGRAMS,AND REAL ESTATE MARKET

7

Inheritance, tax programs, and realestate transactions• Examine the interaction among inheritance,
inheritance‐related tax programs, andtransactions in real estate markets• Focus on the following two:
– Inheritance tax– Deduction of inheritance tax amount in capitalgains by the sales of inherited assets• Show how each of these two increases thenumber of real estate sales
8Inheritance tax in Japan
Inheritance tax• Heirs pay inheritance tax proportional to the tax basecalculated from asset amount they receive from theones who die• Tax base = the value of inherited assets ‐ basic
allowance• Tax rate: 10%‐55%• Tax payment due: 10 months after inheritance• Real estate has the largest share (more than 40% in
year 2013) among the properties inherited in Japan9

Capital gains tax in Japan
Capital gains tax• Capital gains incurred by the sales of assets
including land, buildings, stocks, bonds, jewelries
are taxed• Tax base for capital gain = sales price of assets –(costs expensed upon acquisition + transaction
costs)• Tax rate: 15% for income tax and 5% for residencetax (for long period of ownership) and 30% forincome tax and 9% for residence tax (for shortperiod of ownership)10

Deduction of inheritance tax amountin capital gains
Special treatment of capital gains tax after
inheritance• In case heirs sell assets shortly after paying
inheritance tax, they may add the tax amount tocosts expensed upon acquisition• Substantial tax reduction in case of large capitalgains and/or large payment of inheritance tax• Deduction applies to the sales of inherited assets
within 3 years from the payment of inheritancetax
11Effect of these tax programs on thesales of real estate
Two types of heirs that are motivated to sell inherited assets shortly
after inheritance• Those that are liquidity‐constrained and unable to pay inheritancetax by their regular income Tend to liquidate the assets by the tax due date (10months after inheritance)• Those that covered their inheritance tax obligation by their income
but want to sell the inherited assets for some reasons Tend to liquidate the assets by the expiration date of special
treatment of capital gains tax (3 years and 10 months after
inheritance)
Actually, the duration between inheritance and sales of real estate isconsiderably short in our data

12

Duration between inheritance and sales of realestate: Land
Edogawa

Koto

MinatoArakawa

Shibuya

Shinjuku

Suginami

Setagaya

ChiyodaAdachi

Taito

Ota

Chuo

NakanoItabashi

ShinagawaBunkyoToshimaKita

10 20 30
0
10 20 30
0

0

2000

3000

Days between inheriting and seling land (width = 100days) ：2008

13

Meguro

2000

3000

0

1000

Nerima10 20 30

Sumida1000

0Percent

0

10 20 30

0

10 20 30

Katsushika

0

1000

2000

3000

0

Graphs by ward in Tokyo

1000

2000

3000

0

1000

2000

3000

Duration between inheritance and sales of realestate: Detached houses
Edogawa

Koto

MinatoArakawa

Shibuya

Shinjuku

Suginami

Setagaya

ChiyodaAdachi

Taito

Ota

Chuo

NakanoItabashi

ShinagawaBunkyoToshimaKita

0 10 20 30
0 10 20 30

0

SumidaMeguro

1000

2000

3000

0

1000

2000

3000

Nerima0 10 20 30

Percent

0 10 20 30

0 10 20 30

Katsushika

0

1000

2000

3000

0

1000

2000

3000

0

1000

2000

3000

Days between inheriting and seling building (width = 100days) ：2008 14
Graphs by ward in Tokyo

Duration between inheritance and sales of realestate: Condominium units
Edogawa

Koto

MinatoArakawa

Shibuya

Shinjuku

Suginami

Setagaya

ChiyodaAdachi

Taito

Ota

Chuo

NakanoItabashi

ShinagawaBunkyoToshimaKita

10 20 30
0
10 20 3000SumidaMeguro

1000

2000

3000

0

1000

2000

3000

Nerima0 10 20 30

Percent

0

10 20 30

0 10 20 30

Katsushika

0

1000

2000

3000

0

1000

2000

3000

0

1000

2000

3000

15
Days between inheriting and seling condominium unit (width = 100days)：2008

Graphs by ward in Tokyo

Inheritance and population aging: Are theyhighly correlated?
• One important concern is the relationship between the two• Population aging ratio is usually a proxy for the demand for realestate, while the number of inheritance indicates the extent thatheirs are eager to sell real estate properties• If these two (aging of population and inheritance) are highly
spatially correlated, it is difficult to identify which of the two(increased supply or decreased demand) causes the drop in realestate prices• However, we find this is not the case in our data
– Population aging ratio is high in old town (下町), while inheritanceoccurs frequently in uptown (山の手)– Population aging ratio represents the extent of aging among all theresidents, while inheritance reflects the extent of aging amongproperty owners• In the estimation, we include both of these two variables

16Ageing rate in 2005
(Ratio of population of age 65+ to total population)

17

Inheritance ratio in 2005‐2008(Number of unique lots where inheritance occurred between 2005‐
2008/Total number of unique lots that experienced registry changes
during the period)

18

EMPIRICAL APPROACH

19

Data
• Registry data （登記変更情報）– The registry offices of the government record all theownership changes on land and buildings for each addressby types of reasons, including• Sales‐purchase• Inheritance• Foreclosure• Donation• Establishment of buildings or land pieces• Division/merger of land pieces– Enable us to identify the date of inheritance and sales‐purchase of land/building for each piece of land
– Cover Tokyo metropolitan area (central 23 cities) for years
2000‐2014– Provided by JON, a private company specialized incollecting such registry data from local governments
20

Data
• Real estate transaction data （取引価格情報）– Real estate transaction information collected from anumber of real estate agencies– Include not only information on properties that wereactually transacted but also on those that were offered bythese agencies for sales– Three types of properties: Land（土地）, detached houses（一戸建て）, and condominium units（区分所有）• Offer sales prices• Contract prices• Address• Contract date
• Other characteristics of real estate– Cover Tokyo metropolitan area (central 23 cities) for years
2000‐2015– Provided by Recruit Co. Ltd.
21

Data
• We combine these two datasets and construct several importantvariables by the district‐year （丁目‐年）level for analysis• There are 3,132 districts （丁目） within Tokyo central 23 cities (as of2010 Population Census)– Inheritance ratio1: number of unique lots (地番) that experienced
inheritance for the past three years in a district/ number of unique lotsthat experienced registry changes for the past three years– Inheritance ratio2: number of unique lots (地番) that experienced
inheritance for the past three years in a district/ acreage of the districtin square kilometers– Sales ratio1: number of newly registered properties for sale in ayear/number of unique lots that experienced registry changes for the
past three years– Sales ratio2: number of newly registered properties for sale in ayear/acreage of the district in square kilometers– Average land prices based on Public Notice on Land Prices （公示地価）
issued annually by Ministry of Land, Infrastructure, Transportation,
and Tourism (MLIT)
22

Data

•
•

Other variables are constructed by the transaction level
For each type of properties, variables that represent property characteristics differ– For land
•
•
•
•
•
•

Acreage of land
Number of minutes it takes on foot from the nearest subway station
Number of minutes from the nearest station to Tokyo station
Building to land ratio
Floor to area ratio
Width of road in front– For detached houses
•
•
•
•
•
•
•
•
•
•
•

Acreage of land
Number of years after construction
Floor size
Number of minutes it takes on foot from the nearest subway station
Number of stories of the building
Number of rooms
Number of minutes from the nearest station to Tokyo station
Dummy for reinforced concrete building
Building to land ratio
Floor to area ratio
Width of road in front– For condominium units
•
•
•
•
•
•
•
•

Number of years after construction
Floor size
Number of minutes it takes on foot from the nearest subway station
Number of stories of the building
Number of rooms
Number of minutes from the nearest station to Tokyo station
Dummy for reinforced concrete building
Dummy for south‐facing rooms

23

Estimation model•Two‐step estimation with IV for sales inventory variable

Sales/Inventory(i,t)= α + β1 Inheritance(i,t‐3,t) + β2 Inheritance×AppValue(i,t)+ ψX(i,t)+ δ1(city) + δ2(year) + ε(i,t)
PRICE(i,t)= γ + η1 Sales/Inventory(i,t) + ξX(i,t)+ φ1(city) + φ2(year) + e(i,t)
where
i: property identification
t: Year‐Month‐Week
24

RESULTS

25

Summary statistics(Land:土地)Ｔａｂｌｅ 1
Summary Statistics: Regression Sample
Variables
Unit Price: Sales price/acreage (ten thousand JPY/m2)
Sales ratio: (number of unique newly registered properties for sale in ayear)/(number of unique lots that experienced registry changes) (%)
Sales index: (number of unique newly registered properties for sale in ayear)/(acreage of the district in km2)
Inheritance ratio: (number of unique lots that experienced inheritancefor the past three years)/(number of unique lots that experienceregistry changes for the past three years)
Inheritance index: (number of unique lots that experienced inheritancefor the past three years)/(acreage of the district in km2)
Population aging rate: (population of age 65+)/(total population) (%)
Average housing appraisal value in the district: (million JPY/m2)
Acreage of land (m2)
Minutes to the nearest subway station on foot
Minutes from the nearest subway station to Tokyo by train during theday
Building to land ratio (%)
Floor to area ratio (%)
Width of road in front (m)

Obs.

Mean

Std.Dev

Min

Q1/4

Median

Q3/4

Max

Land
25979

65.15

78.46

0.610

45.62

59.72

75.62

11360

25979

4.250

3.290

0

2.110

3.470

5.460

33.06

25979

28917

21714

0

14074

23684

37273

190000

25979

5.230

1.710

0

4.190

5.190

6.100

13.65

25979
25979
25979
25979
25979

37025
18.59
0.570
117.5
8.630

15539
3.180
0.400
86.19
4.410

0
5.380
0.150
0.500
0

26087
16.60
0.430
73.03
5

36111
18.38
0.520
99.27
8

46667
20.23
0.610
134.5
11

110000
40.18
10.79
6164
36

25979
25979
25979
25979

30.21
54.78
162.3
4.920

7.290
13.51
85.50
3.670

4
0
0
0

26
50
100
3.900

30
60
150
4

35
60
200
5.800

126
100
900
72

26

Summary statistics(Detached houses:戸建)
Detached houses
Variables
Obs.
Mean
Std.Dev
Min
Unit Price: Sales price/acreage (ten thousand JPY/m2)
78855
59.56
24.88
0.0500
Sales ratio: (number of unique newly registered properties for sale in ayear)/(number of unique lots that experienced registry changes) (%)
78855
4.560
3.700
0
Sales index: (number of unique newly registered properties for sale in ayear)/(acreage of the district in km2)
78855
30610
23659
0
Inheritance ratio: (number of unique lots that experienced inheritancefor the past three years)/(number of unique lots that experienceregistry changes for the past three years)
78855
4.960
1.630
0
Inheritance index: (number of unique lots that experienced inheritancefor the past three years)/(acreage of the district in km2)
78855
35022
15674
0
Population aging rate: (population of age 65+)/(total population) (%)
78855
18.71
3.400
5.380
Average housing appraisal value in the district: (million JPY/m2)
78855
0.480
0.240
0.140
Age of the structure in years
78855
3.600
7.940
0
Structure area (floor space area) (m2)
78855
103.0
48.05
0.950
Acreage of land (m2)
78855
88.72
52.86
2
Minutes to the nearest subway station on foot
78855
9.500
4.900
0
Total number of stories in the building; i.e. the total height of thebuilding
78855
2.350
0.700
0
Number of rooms in the unit (excluding SLDK)
78855
3.450
0.890
0
Minutes from the nearest subway station to Tokyo by train during the
day
78855
31.09
7.700
4
Dummy for reinforced concrete construction
78855
0.03000.160
0Building to land ratio (%)
78855
54.61
14.42
0
Floor to area ratio (%)
78855
162.8
78.22
0
Width of road in front (m)
78855
4.540
2.430
0

Q1/4
48.10

Median58.13

Q3/4 Max
68.27
4768

2.190

3.680

5.930

55.88

14444

25000

40435

210000

3.910

4.900

5.870

13.65

23636
16.67
0.350
0.0800
84.77
62.39
6

33704
18.59
0.450
0.250
94.96
80.64
9

45263
20.52
0.540
0.830
107.6
100.6
13

140000
40.18
10.79
87.92
7535
8060
63

2
3

2
3

3
4

25
45

26
0
50
100
4

31
0
60
150
4

37
0
60
200
5.400

48
1
264
840
99.90

27

Summary statistics(Condominium units: 区分建物)
Condo. Units
Variables
Obs.
Mean
Std.Dev
Min
Unit Price: Sales price/acreage (ten thousand JPY/m2)
53301
53.81
19.81
0.350
Sales ratio: (number of unique newly registered properties for sale in ayear)/(number of unique lots that experienced registry changes) (%)
53301
3.350
2.430
0
Sales index: (number of unique newly registered properties for sale in ayear)/(acreage of the district in km2)
53301
28092
23339
0
Inheritance ratio: (number of unique lots that experienced inheritancefor the past three years)/(number of unique lots that experienceregistry changes for the past three years)
53301
4.540
1.530
0
Inheritance index: (number of unique lots that experienced inheritancefor the past three years)/(acreage of the district in km2)
53301
38128
17764
0
Population aging rate: (population of age 65+)/(total population) (%)
53301
17.63
3.570
5.380
Average housing appraisal value in the district: (million JPY/m2)
53301
0.660
0.480
0.170
Age of the structure in years
53301
20.87
12.19
0
Structure area (floor space area) (m2)
53301
61.27
22.93
1.900
Minutes to the nearest subway station on foot
53301
7.040
4.250
0
Total number of stories in the building; i.e. the total height of thebuilding
53301
9.170
5.290
0
Number of rooms in the unit (excluding SLDK)
53301
2.210
0.890
0
Minutes from the nearest subway station to Tokyo by train during the
day
53301
26.60
8.130
1
Dummy for reinforced concrete construction
53301
0.600
0.490
0
Dummy variable for the unit facing south
53301
0.340
0.470
0
Story of the unit; i.e. the height of the unit that was sold
53301
6.900
3.770
0

Q1/4
41.03

Median50.53

Q3/4 Max
63.01
831.6

1.570

2.780

4.500

27.42

11818

22273

36875

170000

3.480

4.440

5.470

13.65

25172
15.51
0.390
9.580
48.16
4

36667
17.63
0.520
21.17
59.26
6

49167
19.56
0.740
31.25
70.62
10

140000
40.18
10.14
68.33
877.8
96

6
2

8
2

11
3

143
51

20
0
0
4

26
1
0
6

33
1
1
8

48
1
1
80

28

Result for the first‐stage estimation(Inheritance ratio1 & sales ratio1)
TSLS: First stage

VARIABLES
Inheritance ratio1
Average housing appraisal value in the district
Inheritance × AppValue
Population aging rate
Age of the structure in years
Structure area (floor space area) in square meters
Acreage of land
Minutes to the nearest subway station on footTotal number of stories in the building; i.e. the totalheight of the building
Number of rooms in the unit (excluding SLDK)Minutes from the nearest subway station to Tokyo bytrain during the day
Dummy for reinforced concrete construction
Building to land ratio
Floor to area ratio
Width of road in front
Dummy variable for the unit facing south
Story of the unit; i.e. the height of the unit that was
soldConstant
Fixed Effects
Year dummy variable
Ward dummy variable
Observations

Land
OLS
IV
IV
IV
(1)
(2)
(3)
(4)
Sales ratio Sales ratio Sales ratio Sales ratio

Detached houses
OLS
IV
IV
IV
(5)
(6)
(7)
(8)
Sales ratio Sales ratio Sales ratio Sales ratio

Condominium units
OLS
IV
IV
IV
(9)
(10)
(11)
(12)
Sales ratio Sales ratio Sales ratio Sales ratio-0.0235* -0.0235* 0.0519*-0.365*** 0.372-0.146***0.0158** 0.0177*** 0.0176***

0.0471*** 0.0477*** 0.0291-0.354*** -0.547**
0.03980.0119*** 0.0119*** 0.0120***-0.0433*** -0.0430*** -0.0430***-0.000310 -0.000241 -0.000243
0.00137*** 0.00135*** 0.00135***
0.0721*** 0.0710*** 0.0710***0.0341*** 0.0305*** -0.0106-0.308*** -0.578***0.0659***-0.0146*** -0.0149*** -0.0143***0.0177*** 0.0179*** 0.0178***0.00281*** 0.00292*** 0.00283***
0.0788*** 0.0763*** 0.0764***-0.268*** -0.269*** -0.269***-0.0546*** -0.0540*** -0.0541***-0.00302 -0.000967 -0.000322
0.0357*** 0.0281** 0.0281**

0.0257*** 0.0239*** 0.0239***0.07150.07890.07770.0131*** 0.0133*** 0.0133***-0.00580***-0.00582***-0.00581***0.0858*** 0.0858*** 0.0857***0.0409*** 0.0385*** 0.0384***
0.00541-0.00198 0.000137-0.000629**-0.000598**-0.000605***
0.0783*** 0.0768*** 0.0768***

0.0165*** 0.0140*** 0.0145***0.0139*** 0.0136*** 0.0136***-0.00420***-0.00414***-0.00418***
0.0259*** 0.0257*** 0.0262***-0.0403** -0.0409** -0.0403**

2.268***

3.143***

2.399***

3.207***

3.826***

3.950***YES
YES
25,979YES
YES
25,979YES
YES
25,979YES
YES
78,855YES
YES
78,855YES
YES
78,855-0.000358 -0.000935 -0.000879-0.259** 0.356*** 0.494***
YES
YES
53,301YES
YES
53,301YES
YES
53,30129

Result for the second‐stage estimation(Inheritance ratio1 & sales ratio1)
Baseline Specification: OLS and TSLSLand

VARIABLES
Sales ratio1
Population aging rate
Age of the structure in years
Structure area (floor space area) in square meters
Acreage of land
Minutes to the nearest subway station on footTotal number of stories in the building; i.e. the totalheight of the building
Number of rooms in the unit (excluding SLDK)Minutes from the nearest subway station to Tokyo bytrain during the day
Dummy for reinforced concrete construction
Building to land ratio
Floor to area ratio
Width of road in front
Dummy variable for the unit facing south
Story of the unit; i.e. the height of the unit that was
soldConstant
Fixed Effects
Year dummy variable
Ward dummy variable
Observations

OLS
(1)
Price

IV
(2)
Price

IV
(3)
Price

IV
(4)
Price

-0.00158 -31.62
0.189
0.599

-46.58*** -39.15***0.794**
0.697**-0.00827 -0.0284*-0.401*** 2.095-0.0379*** -0.0332***
3.277*** 2.690***-0.552*** -0.0103

0.246

0.119

-0.138** 0.299
0.0490*** -0.0830
1.167*** 2.004***

0.506*** 0.403***-0.145*** -0.114***2.400*** 2.203***

OLS
(5)
Price

Detached houses
IV
IV
(6)
(7)
Price
Price

IV
(8)
Price

OLS
(9)
Price

Condominium units
IV
IV
(10)
(11)
Price
Price

IV
(12)
Price

0.0723*** 9.734*** -19.87*** -18.69***-0.0255-0.188*** 0.309*** 0.289***-0.290*** 0.128-1.153*** -1.102***-0.0338*** -0.0312*** -0.0393*** -0.0389***0.0764*** 0.0632*** 0.104*** 0.102***-0.119*** -0.805*** 1.296*** 1.213***0.0649*** 15.51***
0.0712*** 0.236***-0.810*** -1.089***0.0709*** 0.0269**-0.366*** -1.563*** 0.683***

0.511***-3.209*** -0.570-0.854*** -0.319-8.654*** -8.332***-1.957*** -1.891***

0.355*** 0.417*** 0.301***-0.481*** -1.023*** -0.00666

0.310***-0.0843-0.257*** -0.497***
6.327*** 5.630***
0.143*** 0.0126-0.0395*** 0.0170
0.313*** -0.517***0.237***
7.767***
0.412***-0.156***2.025***-0.347*** -0.975*** 0.204***
1.851*** 1.753*** 1.937***

0.114**
1.923***-0.04100.575*-0.581**-0.493**0.207***
7.681***
0.396***-0.149***1.924***-13.48*** -11.26***-0.0736* -0.0499-0.566*** -0.606***
0.110*** 0.103***146.8***

217.7***

251.3***

234.6***

111.8***

79.76***

177.8***

173.9***

0.518***
81.63***

0.522***
84.67***

0.514***
78.97***

0.514***
79.41***YES
YES
25,979YES
YES
25,979YES
YES
25,979YES
YES
25,979YES
YES
78,855YES
YES
78,855YES
YES
78,855YES
YES
78,855YES
YES
53,301YES
YES
53,301YES
YES
53,301YES
YES
53,30130

Result for the first‐stage estimation(Inheritance ratio2 & sales ratio2)
TSLS: First stage

VARIABLES
Inheritance ratio2
Average housing appraisal value
in the district
Inheritance × AppValue
Population aging rate
Age of the structure in years
Structure area (floor space area) insquare meters
Acreage of land
Minutes to the nearest subway
station on footTotal number of stories in thebuilding; i.e. the total height of thebuilding
Number of rooms in the unit
(excluding SLDK)Minutes from the nearest subway
station to Tokyo by train during theday
Dummy for reinforced concrete
construction
Building to land ratio
Floor to area ratio
Width of road in front
Dummy variable for the unit facing
south
Story of the unit; i.e. the height of
the unit that was sold
Constant
Fixed Effects
Year dummy variable
Ward dummy variable
Observations

OLS(1)
Sales index

Land
IV
IV
IV
(2)
(3)
(4)
Sales index
Sales index
Sales index
0.260***
0.252***
0.196***-4,217***-322.7***-297.0***-7,220***0.0995***-287.1***-10.40***-10.13***417.9***

397.4***OLS(5)
Sales index

Detached houses
IV
IV
(6)
(7)
Sales index
Sales index
0.380***
0.381***-3,503***

IV(8)
Sales index
0.275***-200.5***-280.2***-199.7***-277.0***-10,668***
0.211***-179.2***-279.5***-9.975***-0.965-0.533-0.279-0.732398.6***

355.1***

OLS(9)
Sales index

Condominium units
IV
IV
IV
(10)
(11)
(12)
Sales index
Sales index
Sales index
0.457***
0.457***
0.235***-1,032***-776.0***112.7***-778.3***113.1***-12,403***
0.271***-686.1***121.0***

0.127-0.76513.85***

14.19***

16.46***

344.1***

346.5***

582.0***

574.2***

555.5***-1,113***-1,124***-1,159***147.4***

154.6***

159.2***-347.2***-341.0***-342.1***

193.0*

167.8

35.40

-73.48***-107.8***-110.2***-24.54-42.71***-44.14***262.3***

254.5***

179.2***

38.31
94.49***-29.29***226.1***-61.97100.1***-21.89***2.454-10.3192.62***-29.29***229.1***-34.1098.05***-21.61***
6.938-84.2991.03***-29.07***228.9***-9.074100.8***-22.35***11.83-493.2***-495.4***-492.5***6.947-2,696**4.986-660.1

9.823
10,259***21,866***32,105***34,171***

20,296***

26,429***30,596***

YES
YES
25,979YES
YES
25,979YES
YES
25,979YES
YES
78,855YES
YES
78,855YES
YES
78,855YES
YES
53,301YES
YES
53,301YES
YES
53,30131

Result for the second‐stage estimation(Inheritance ratio2 and sales ratio2)
Baseline Specification: OLS and TSLSLand

VARIABLES
Sales ratio2
Population aging rate
Age of the structure in years
Structure area (floor space area) insquare meters
Acreage of land
Minutes to the nearest subway
station on footTotal number of stories in thebuilding; i.e. the total height of thebuilding
Number of rooms in the unit
(excluding SLDK)Minutes from the nearest subway
station to Tokyo by train during theday
Dummy for reinforced concrete
construction
Building to land ratio
Floor to area ratio
Width of road in front
Dummy variable for the unit facing
south
Story of the unit; i.e. the height of
the unit that was sold
Constant
Fixed Effects
Year dummy variable
Ward dummy variable
Observations

OLS
(1)
Price

IV
(2)
Price

IV
(3)
Price

IV
(4)
Price

-2.00e-05
0.185-6.79e-05
0.175-0.000664*** -0.000623***
0.05380.0622-0.00853-0.00915-0.0169***-0.396***-0.382***-0.209*

OLS
(5)
Price

Detached houses
IV
IV
(6)
(7)
Price
Price

IV
(8)
Price

OLS
(9)
Price

Condominium units
IV
IV
(10)
(11)
Price
Price

IV
(12)
Price

2.69e-06-0.0243-0.292***8.93e-06-0.0243-0.291***-8.52e-05*** -9.90e-05***-0.0242-0.0242-0.317***-0.321***-9.35e-07
0.0700***-0.809***2.45e-05*** 1.01e-05
0.0851***0.0765***-0.812***-0.810***-1.21e-05*
0.0633***-0.808***-0.0338***
0.0765***-0.0338***
0.0766***-0.0337***
0.0759***-0.0337***
0.0758***0.0711***0.0712***0.0711***0.0711***-0.0164***-0.221*-0.114***-0.116***-0.0962***-0.0934***-0.361***-0.368***-0.364***-0.358***-3.225***-3.218***-3.324***-3.340***0.355***

0.352***

0.354***

0.356***-0.857***-0.854***-0.892***-0.898***-0.479***-0.482***-0.480***-0.478***-0.557***-0.568***-0.714***-0.704***-0.255***-0.253***-0.277***-0.280***-0.344***-0.345***-0.345***-0.344***6.261***
0.155***-0.0423***
0.324***

1.847***-0.0687
0.0380***1.108***

6.271***
0.153***-0.0419***0.323***

1.856***-0.06420.0372***
1.104***

6.339***
0.143***-0.0397***
0.318***

1.861***-0.130**0.0478***1.161***

6.334***
0.144***-0.0399***
0.319***

1.851***-0.136**
0.0487***
1.165***-0.0440-0.0321-0.0389-0.04930.518***
81.63***

0.517***
81.30***

0.517***
81.49***

0.518***
81.78***

147.4***YES
YES
25,979148.6***YES
YES
25,979164.5***YES
YES
25,979163.4***YES
YES
25,979111.9***
YES
YES
78,855111.7***
YES
YES
78,855114.5***
YES
YES
78,855114.9***
YES
YES
78,855YES
YES
53,301YES
YES
53,301YES
YES
53,301YES
YES
53,30132

Findings• When inheritance ratio and average appraisal value
are employed for IVs
inheritance↑ ⇒ sales↑ ⇒ real estate prices↓• When appraisal value of land prices is higher
inheritance↑ ⇒ sales↑↑• Substantial economic significance• There are several qualifications
When only inheritance ratio is employed, sales↑⇒real estate
prices↑Inheritance ratio may not be enough as an instrument
Land in the baseline case, inheritance↑ ⇒ sales inventory↓
Condominium units in the robustness check case,sales↑⇒marginally significant impact on prices
33

Issues to be addressed• Construction of the transaction‐level variable on theincidence of inheritance and sales– Currently, we only have the district‐level variable on the numberof inheritance and the density of sales– It is difficult to construct the variable. Since 地番 (used in JONdata) and 住居表示 (used in Recruit data) do not automaticallymatch  Any ways to do this?
– But when done, we are able to examine the “spillover” frominheritance‐related real estate transactions to othertransactions within a district• Persistence of the price decline caused by the supply shock– Currently, we only show instantaneous negative impact on realestate prices in the district level– However, such idiosyncratic shocks may disappear shortly whenbuyers in the neighborhood flow into the market and drive up
the prices– Hence, it is worth examining the persistence of the price decline34