bluuebunny/crossref_metadata_2025 huggingface dataset:
Innovation and Product Development Strategies in the Italian Motorcycle Industry
Authors: Muffatto Moreno , Panizzolo Roberto
Published: October 2003

The motorcycle industry in Italy offers fertile ground for anyone interested in developing a better understanding of the role innovation plays in enhancing a firm's competitive position. This industry includes both domestic and Japanese firms, with companies ranging from high‐volume manufacturers to specialty or niche producers. Firms trying to gain a competitive edge in this crowded field must contend with not only advances in product and process technology, but also the whims of fashion.

In a survey of top‐level marketing and product development managers from eight leading firms in the Italian motorcycle industry, Moreno Muffatto and Roberto Panizzolo explore the innovation models these firms employ to enhance their competitive position. Their study has the following objectives: categorizing the various competitors in terms of their product and market strategies and their product development and innovation strategies; highlighting differences between the methods of Italian and Japanese firms competing in this market; analyzing the relationships between firms, as well as the roles suppliers play in the various innovation strategies; and identifying the various organizational models employed by the firms in this industry.

Different product and market strategies are identified on the basis of three variables: total production volume, the number of different products offered, and the number of different engine capacities offered. Using these variables, the companies in the study are categorized as volume producers, specialists, or niche specialists. The firms are further differentiated on the basis of the relative emphasis each places on product technology and design, product innovation, product variety, and time‐based competition.

In the firms studied, partnerships play a key role in new product development. Nearly every firm participates in joint projects, most often involving development of either an entire vehicle or an engine. Other partnerships involve firms in countries that offer emerging markets for the motorcycle industry. Organizational structures and strategies employed by the volume producers in this study include: the large product leader, who oversees concept definition and product planning; the project leaders group, which coordinates all phases of development, including activities assigned to external groups; the project managers matrix, a matrix organizational structure with a strong product orientation; and the business unit program manager, who oversees all projects within an independent business unit.
Concept Testing With and Without Product Trial
Authors: Dickinson John R. , Wilby Carolyn P.
Published: October 2003

An effective new products team must have the means for deciding where to place its bets, and concept tests play a pivotal role in the early screening of new product ideas. To gauge potential customers' reactions to a new concept, such tests may employ drawings, descriptions, and attribute lists, as well as positioning statements and perhaps trial of a prototype product. When deciding how to present a product concept, researchers must consider the possibility that the combination of elements chosen might affect the outcome of the concept test. For example, will responses to a product concept differ depending on whether the concept test includes a product trial?

John Dickinson and Carolyn Wilby explore this question in a study of a concept test involving a product line extension: baking soda toothpaste. Their study examines the possibility of interactions between two elements of concept testing: product positioning statements–in this case, statements of taste, gentleness, and all‐natural ingredients–and product trial. In other words, their study investigates whether or not concept tests involving both product positioning and trial will evoke different reponses than those that involve only exposure to the product concept.

Participants in the study were randomly assigned to one of six groups. Roughly half the subjects tried the product, and all participants viewed one of three story boards. Each story board presented the product concept, with reference to one of the three positioning statements. Those participants who tried the product did so before viewing a storyboard. The concept tests recorded participants' evaluations against six primary criteria: three related to the three product positioning benefits; two involving purchase interest; and one measuring overall preference for the product. Participants also rated their confidence in their responses, yielding 12 measures for testing the effects of product positioning, product trial, and the interaction between these two elements.

For the six primary criteria, analysis of the test results did not reveal any interaction effects between product trial and product positioning. In other words, the results for these criteria would have been approximately the same regardless of whether the concept test included a product trial. Although product trials can provide useful input to other phases of a development effort, the results of this study suggest that in the case of product line extensions for familiar consumer goods such as toothpaste, effective concept tests do not require product trials.
Perspective—Riding the Wind: Managing New Product Development in an Age of Change
Authors: Tomkovick Chuck , Miller Christopher
Published: October 2003

New product development (NPD) has never been more challenging or rewarding than it is today. With the dawning of the new millennium, new product developers now find themselves in an “age of change,” the likes of which the world has never known. The rate of change is numbing, if not stupefying for many business people. With the winds of change blowing at near gale force intensity levels, this is clearly a time for NPD professionals to pursue new product and market strategies that are anchored on sound business fundamentals.

This article begins with a brief review of the Product Development & Management Association's 1998 International Research Conference held in Atlanta. The theme for the conference was “Achieving Excellence in New Product Development and Management.” The article then offers a reflective look at seven NPD themes that could dominate new millennium business thinking and offer guidance to those seeking new product success.

The article's first theme discusses why NPD is increasing in importance. The second theme outlines key NPD building blocks which NPD champions must bolster for new product success. The third theme explores the value in conceptualizing NPD output in items of “turns per decade.” The fourth theme champions the notion that continuous quality improvement is an integral part of NPD's contribution to a firm. The fifth theme explains why product elimination is an essential element in the innovation process. Theme number six reminds readers that fun and optimism are essential and commonly overlooked ingredients for sustaining NPD achievement. The seventh theme states that product development professionals build credibility and successful careers by delivering on promises made. Innovation opportunities embedded within each theme are explored from both firm‐level and individual developer‐level perspectives.

In building the case for their themes, the authors initially provide a rationale for NPD's growing stature and importance. Then they suggest NPD strategies that firms can implement with high likelihood of success. The article concludes with suggested actions that individual developers can undertake to bolster their own careers while simultaneously strengthening the NPD profession.
The Effect of Sales Force Adoption on New Product Selling Performance
Authors: Hultink Erik Jan , Atuahene‐Gima Kwaku
Published: October 2003

Although several studies have suggested that the sales force is a major contributing factor to new product success, few studies have focused on new product adoption by the sales force, particularly with respect to its relationship with selling performance. The present article presents empirical evidence on the impact of sales force adoption on selling performance. We defined sales force adoption as the combination of the degree to which salespeople accept and internalize the goals of the new product (i.e., commitment) and the extent to which they work hard to achieve those goals (i.e., effort). It was hypothesized that the impact of sales force adoption on selling performance will be contingent on supervisory factors (sales controls, internal marketing of the new product, training, trust, and supervisor's field attention), and market volatility. Therefore, this article also provides evidence of the conditions under which sales force adoption of a new product is more or less effective in engendering successful selling performance. The hypothesized relationships were tested with data provided by 97 high technology firms from The Netherlands.

The results show that sales force adoption is positively related to selling performance. This finding suggests that salespeople who simultaneously exhibit commitment and effort will achieve higher levels of new product selling performance. Outcome based control, internal marketing and market volatility are also positively related to new product selling performance. The effect of sales force adoption on selling performance is stronger where outcome based control is used and where the firm provides information on the background of the new product to salespeople through internal marketing. Training and field attention weaken the adoption‐performance linkage. These findings may indicate that salespeople in The Netherlands interpret training as “micromanaging” and field attention as “looking over their shoulder.” We conclude with implications of our study for research and managerial practice.
Maintenance Effort and the Professional Landlord: An Empirical Critique of Theories of Neighborhood Decline*
Authors: Quinn Michael A. , Elliott Donald S. , Mendelson Robert E. , Thoman Jeffery A.
Published: October 2003

Most theories of neighborhood decline assume a reduction in expenditures for repair and maintenance of housing. Findings reported in this paper suggest that this view is overly simplistic. Based on analysis of 127 low‐income rental properties in the city of St. Louis, Missouri during the 1960s and early 1970s, the authors find that in most cases expenditures for repair and maintenance increased in the face of declining rents. While not totally discounting the standard theories, this paper sets forth an alternative description of low‐income property management in neighborhoods undergoing decline.
Assessing Student Perceptions of Real Estate Careers
Authors: Wofford Larry E. , Preddy R. Keith
Published: October 2003

In selecting a career, students seek to maximize expected satisfaction. Expected satisfaction is a function of perceptions of the relative level of critical attributes possessed by a career area. This paper uses multidimensional scaling to produce a perceptual space to analyze the perceived similarities and dissimilarities of eight business career areas for a group of students and identify the attributes critical to these perceptions. With respect to those attributes most critical to perceptions, real estate careers were perceived as providing relatively high economic potential, low prestige, low entry difficulty and little career predictability. Information such as in this study provides a baseline for career counseling as well as eliminating possible distortions in perceptions of real estate careers.
A Cash Flow Model of Rational Housing Tenure Choice*
Authors: Johnson Michael S.
Published: October 2003

This paper develops a model of housing costs in a cash flow framework. The cash flow approach allows both the consumption and investment aspects of tenure choice to be analyzed. By solving the model for the rental flow equivalent to any owning situation, we can determine whether or not a household would buy or rent from an economic perspective. The results are very sensitive to the household's income, the expected duration of occupancy, the mortgage interest rate, and inflation expectations. The results suggest that “rule‐of‐thumb” generalizations about tenure choice are often ill‐founded, and that studies of tenure choice need to explicitly consider the interaction of income, taxes, length of occupancy and expectations.
Savings and Loan Demand for Liquid Assets: Theory, Evidence and Implications for Policy*
Authors: Weinrobe Maurice
Published: October 2003

In this study a model of liquid asset management for individual savings and loan associations is developed. The model combines features of portfolio theory and inventory theory and is used to draw hypotheses on the relationship between the demand for excess liquidity and a variety of independent variables.

Pooled cross section‐time series equations are estimated for the demand for excess liquidity of 198 S & Ls over the period 1974–1978. In addition to conclusions on the role of individual variables, the estimated equations reveal that the FHLBB can affect the portfolios of some, but not all, S & Ls. This implies that FHLBB liquidity policy can have an effect on the mortgage market.
Improvement of Owner‐Occupied Rental Housing: A Game‐theoretic Study of the Decision to Invest
Authors: O'Hare Michael
Published: October 2003

Game‐theoretic analysis of an owner's decision about renovating or improving his property indicates that some socially desirable choices are dominated, given the owner's preferences. In the case of owner‐occupied multiple dwellings, public policy should revise the institutions that force the owner to injure society in order to benefit himself and his tenants. Separating assessment from building permit issuance (in the area of tax administration), and revising building codes to permit owners to do their own work under appropriate supervision where licensed contractors are now required (in the area of regulation), would be socially beneficial.
Residential Construction Volatility: A Seasonal and Cyclical Inventory Adjustment Analysis
Authors: Evans Richard D.
Published: October 2003

The seasonality of inventories and the seasonality and cyclicality of sales of new single‐family residences by speculative builders may be formally introduced into a partial production adjustment inventory model of housing starts. The theoretical results include variables that imply an interaction between seasonality and cyclicality. A specification error bias in the estimation of the partial adjustment coefficient is evaluated for models that exclude the interaction between seasonality and cyclicality. Stabilization policy is more complex when cyclical instability changes season to season. In this view, justification is found for a seasonal stabilization policy in housing.
Determinants of Canadian Housing Stock Losses
Authors: Skaburskis A.
Published: October 2003

This note examines factors affecting net housing stock loss rates. It develops and estimates an econometric model explaining differences in net stock loss rates across Canada's 10 provinces and northern territories. The regression results show housing stock losses to be affected by migration patterns, completion rates and the quality of the existing stock. When the demand side variables and housing quality is controlled for the addition of 1% to the completion rate, .29% is added to the net stock loss rate, i.e., one unit is lost for every 3.4 units added.
Inflation and Housing Prices*
Authors: Spellman Lewis J.
Published: October 2003

Home ownership is a claim on the stream of net rents. Like any income‐producing asset, the market capitalizes its value. The price‐rent multiple depends upon the expected growth rate of revenues and expenses, on financing terms, and on taxes. This paper derives this price‐rent multiple in terms of these variables and calculates its value from 1963 through 1978.

The results indicate that housing prices grew more rapidly than rents and the CPI largely as the result of a 33% increase in the price‐rent multiple over those years. This increase in the capitalization rate occurred, despite higher nominal financing terms, because the relative terms of housing finance tended to ease and because the expected growth rate of rents increased more than its discount rate.
Price Behavior and Capital Gains on Residential Real Estate: The Case of Sweden*
Authors: Sandelin Bo
Published: October 2003

During most of the postwar period the increase of the prices of single‐family homes in Sweden have exceeded the general inflation, while for several years the opposite is true of apartment houses. We discuss the reasons and present estimates of capital gains attached to this price behavior. It turns out that apartment houses have often yielded nominal but no real capital gains. Single‐family homes have yielded real accrued capital gains amounting to approximately 3% of GNP during the period 1963–1976. We also present a rough indirect method of estimating realized capital gains, first disregarding, and then including the effects of loans.
An Analysis of the Impact of Usury Ceilings on Conventional Mortgage Loans
Authors: Tansey Michael M. , Tansey Patricia Hoon
Published: October 2003

Legislatures institute usury ceilings for a variety of reasons. The ceilings are designed to (1) curb excessive profits, (2) lower interest rates and inflation, (3) stimulate housing and growth, (4) subsidize certain consumer groups, and (5) protect the unwary and uninformed. However, in each case, the usury celings set up perverse effects which may defeat these goals. Particularly since the legislatures do not provide for administrative remedies, rationing, or adjustable ceilings, they cannot control these effects. Any reinstitution of ceilings must avoid these problems if the goals of the program are not to be defeated. However, the most effective policy would be to avoid the usury ceilings altogether.
Determinants of Location for General Purpose Office Firms within Medium Size Cities*
Authors: Archer Wayne R.
Published: October 2003

This study examines determinants of the downtown/non‐downtown location choice for general purpose rental office users. It presents a model of location choice which accounts for linkages, personnel commuting costs and location of market centroid. It fits the model to survey data on office space usage, distinguishing between market oriented and non‐market oriented firms.

The study finds that market oriented firms are primarily sensitive to market location, while non‐market oriented firms are more sensitive to linkages and personnel commuting costs. It also finds that linkages play a limited role in the location decisions even for non‐market oriented offices because, in the medium size cities studied, few firms are linkage intensive.
Growth Management and Land use Controls: The San Francisco Bay Area Experience
Authors: Rosen Kenneth T. , Katz Lawrence F.
Published: October 2003

Local land use and growth controls have had a substantial negative impact on the San Francisco Bay Area housing market. These regulations have significantly diminished the availability of development opportunities in the region and forced builders to make major changes in the way they do business and costly alterations in their development projects. Both the empirical evidence reviewed and the case studies documented in this paper indicate that building moratoria, growth management systems, and restrictive zoning practices have helped lead to significantly increased house prices in those Bay Area communities in which they are present. The evidence strongly suggests that land use controls as they are currently utilized in the Bay Area provide a poor policy alternative for reconciling important environmental and fiscal considerations with equally important regional and national housing needs.
The Coastal Construction Control Line: A Cost‐Benefit Analysis
Authors: Belloit Jerry D. , Smith Halbert C.
Published: October 2003

This paper reports on a cost‐benefit study of the Florida Coastal Construction Control Line (CCCL) in Martin County, Florida. The study compared the costs of implementing and maintaining the line with the value of the potential benefits resulting from (1) storm damage reduction and (2) increased open space. A systems model of development patterns was designed to project forward the historic development patterns along the beach which were compared with the patterns that have occurred subsequent to implementing the CCCL. The analysis showed the CCCL not to be cost effective in the area studied.
Land use Controls: The Case of Zoning in the Vancouver Area
Authors: Mark Jonathan H. , Goldberg Michael A.
Published: October 2003

This paper explores the relationship between rezoning and changes in observed property values and the ability of zoning to mitigate externalities. Three separate methodologies are used in three locations in metropolitan Vancouver to examine these issues. Our results imply that rezoning does not necessarily lead to changes in land use and value. Further, no evidence was found to support the assertion that there are significant negative externalities due to incompatible land uses in residential property markets. Based on these results, we feel it is reasonable to question the continued use of zoning in developed areas of urban regions.
Land use Controls: Can Landowners Force Governmental Bodies to Pay?
Authors: Shedd Peter J.
Published: October 2003

A governmental body has the right to regulate owners' use of their land by exercising police powers. However, when such regulation substantially deprives an owner of the use of land, the owner can argue that a taking has occurred. Traditionally, a landowner could seek a declaration that the governmental regulation was unconstitutional and should be enjoined. At times an alternative remedy available to the landowner has been to sue for monetary damages. This latter action is called inverse or reverse condemnation.

This article examines two recent United States Supreme Court cases that address whether or not an inverse condemnation action is a permissible means by which a landowner can challenge the excessive nature of a zoning regulation. Although these cases have not directly answered this question, this article concludes that such a remedy would be beneficial and should be allowed.
Inflation, Taxes, and the Demand For Housing*
Authors: Boehm Thomas P. , McKenzie Joseph A.
Published: October 2003

Inflation affects homeownership and housing adversely through the “real‐payment tilt” of the conventional mortgage. Expectations of additional housing price appreciation, however, may induce households to invest in housing. This paper uses household data to estimate the demand for homeownership and housing, and it takes explicit notice of expectations of housing price appreciation. The results indicate for each 1% increase in the inflation rate that the conditional probability of purchase falls by 3%. Interest rate effects outweigh appreciation and tax effects. Given the decision to purchase, housing appreciation expectations do not have large effects on the amount purchased.
Black and White Preferences for Neighborhood Racial Composition
Authors: Galster George C.
Published: October 2003

The research investigates the existence, nature and magnitude of the preferences of races to voluntarily “self‐segregate” into particular areas of urban housing markets. Housing market theory is employed to develop a model showing how housing price variations within a group can provide unambiguous evidence of their preferences for neighborhood racial composition. The model is operationalized in a multiple regression specification wherein the variations in a given racial group's housing prices become a function of the dwelling's attributes and the attributes of the neighborhood (including quality, status, stability and density) as well as housing submarket location and racial composition. The size and statistical significance of the coefficient of the last attribute provides the evidence sought.

The regressions are estimated using two micro‐household data bases from St. Louis (1967) and Wooster, Ohio (1975), and results compared. Results show that St. Louis black owners had an aversion to larger black proportions within black submarket neighborhoods, with .7% lower housing prices associated with a 1% higher percentage black. Racial effects for black owners in preponderantly white areas and for black renters in all areas were statistically insignificant. St. Louis whites of both tenures did not demonstrate aversion to neighborhoods with higher percentages of blacks as long as they remained 25% black or less. In areas 25–50% black, however, white prices were 1.5% lower for owners and 3.2% lower for renters per 1% higher proportion black. Such associations continued in majority‐black areas, although the magnitudes of the price effect became progressively smaller. Wooster whites showed an aversion to living in neighborhoods having even a few percent of blacks, with prices 11% lower for owners and 7% lower for renters in such areas compared to all‐white ones.
Mortgage Markets and Inter‐Regional Differences in Conventional Mortgage Terms
Authors: Rudolph Patricia M. , Zumpano Leonard V. , Karson Marvin J.
Published: October 2003

One of the purposes of the secondary mortgage market is to move funds from areas of capital surplus to areas of capital shortage. If mortgage funds move freely throughout the economy then the price of mortgage funds (the terms of the mortgage) should be the same everywhere. Thus, if the secondary mortgage market is efficient, mortgage terms should show less geographic variation after the secondary market began in 1970 than they showed before. In this paper, the efficiency of the market is tested in two stages. In the first, the average terms of mortgage loans in 1968 and 1978 are examined to determine whether they became more homogeneous after the secondary market was begun. In the second stage, the terms are modeled as a function of region, year by region interaction variables, foreclosure rates, the usury ceiling and the average cost of funds. This model is estimated and analyzed using a multivariate multiple regression technique.
Historic Returns and Institutional Real Estate Portfolios
Authors: Miles Mike , Mc Cue Tom
Published: October 2003

This study employs a sample of equity REIT portfolios from 1972–78 to investigate various aspects of real estate returns. Return estimates are derived for the unlevered cash yields by property size, type and location. Based on these data, the effects of certain kinds of diversification on risk‐adjusted returns are examined. Finally, historic REIT portfolios are compared to current commingled fund portfolios and suggestions made concerning the benefits of restructuring.
Real Estate Settlement Pricing: A Theoretical Framework
Authors: Villani Kevin E. , Simonson John
Published: October 2003

This paper examines the pricing of real estate settlement services. Prices charged by real estate brokers, title insurers, private mortgage companies and other settlement service providers have been a public policy issue for a decade. The Real Estate Settlement Procedures Act of 1974 did little to alleviate public concerns or change pricing practices.

The paper provides both a conceptual framework and some observations on how prices for settlement services are determined. It concludes that the demand has little to do with the services themselves, but rather depends on the demand for housing. This creates an environment for unnecessary services to be performed and for prices to be far in excess of cost.
Title Assurance and Settlement Charges
Authors: Ford Deborah Ann
Published: October 2003

The assurance that a seller of real estate has the right to transfer property free and clear of any encumbrances is important to potential purchasers and lenders. In the vast majority of cases in which real property is transferred, title insurance is used for this purpose. Consumer ignorance, coupled with a price structure based on the sales price of the property being insured, has led to an industry in which it is theoretically possible for the total charges by the primary supplier of the services to be indefinitely above a competitive level.
Taxes and the User Cost of Capital for Owner‐Occupied Housing
Authors: Hendershott Patric H. , Slemrod Joel
Published: October 2003

Owner‐occupied housing is said to be favored in the tax code because the return on owner's equity is not taxed and mortgage interest and property taxes can be deducted in the computation of one's income tax base. The special tax treatment reduces the user cost of capital for owner‐occupied housing.

The issue treated in this paper is the measurement of the tax rate to be employed in the user cost calculations. It is argued that different tax rates are appropriate for the tenure choice and quantity‐demanded decisions, and that these values depend on the detailed tax position of the household and the method of finance. Average 1977 tax rates for household in different income ranges are calculated using the NBER TAXSIM microeconomic data file on individual tax returns.
An Indirect Test for Differential Treatment of Borrowers in Mortgage Markets
Authors: Shear William B. , Yezer Anthony M. J.
Published: October 2003

The indirect test implemented in this paper is based on the economics of discrimination which hypothesizes that differential treatment of borrowers, on the basis of age, race, sex, or property location, at any stage of the mortgage transaction, including prescreening, results in segregation of those getting less favorable treatment. Borrowers who perceive that they are receiving less favorable treatment based on age, race, sex, or property location would be segregated into the FHA‐in‐sured sector. Estimates of an FHA participation equation show no evidence of such segregation by sex, race, or center city property location. Younger borrowers do appear to be differentially concentrated in the FHA programs.
The President's Housing Commission and Two Tests of Realistic Recommendations
Authors: Downs Anthony
Published: October 2003

The most commendable work of the President's Housing Commission suffered from two major faults. First, the Commission failied to quantify the costs of alternative policies. This led to biased judgments about what forms of housing aids to adopt. The Commission rejected making housing vouchers for poor renters an entitlement program because that would be too costly. But it accepted continuation of present tax benefits for non‐poor homeowners, though they are also entitlements vastly more expensive than the program it rejected. Second, the Commission correctly attacked local government restrictions for causing high housing costs. But it failed to provide any strong incentives for local governments to reduce such restrictions.
A Future for Public Housing
Authors: Chisholm Nancy S.
Published: October 2003

Two primary reforms are needed for the future success of the current public housing program: revision of the funding system for operating subsidy and development of a strategy for capital improvements and future use of the inventory. The current funding system has been criticized because of the dramatic growth in operating costs in the last decade and because of apparent over‐funding of some public housing authorities (PHAs) and a distributional bias against housing authorities operating in distressed environments. Either a cost‐based operating subsidy system or a market‐rent based system would have strengths as well as weaknesses. Either type of system can provide adequate, fair, constrained, and predictable subsidies. The current level of deterioration of the public housing stock, the concentration of social and physical problems in 7‐to‐15% of the inventory, and the perverse incentives of the present modernization program, suggest a need for reform of the capital improvement funding system. Each PHA should be provided fixed levels of funds, based on its needs, both for rehabilitating and maintaining projects. Further, a project‐by‐project assessment should be made to identify those which cannot be cost‐effectively managed or rehabilitated.

The President's Commission on Housing contributed importantly to public discussion of these policy areas, by recommending a dramatic reassessment of each project and its future use in the context of a change to a market‐based subsidy system.
The Individual Housing Account
Authors: Clemmer Richard B. , Weicher John C.
Published: October 2003

This paper summarizes the available information about the proposed Individual Housing Account (IHA), a tax‐exempt savings account designed to facilitate the accumulation of the downpayment on a home for would‐be first‐time homebuyers. We review both the limited body of U.S. research and data on a similar Canadian program which has been in existence since 1974. We find little evidence to suggest that the IHA would stimulate homeownership or housing construction to any noticeable extent. It would enable potential buyers to save enough for a downpayment more rapidly than they now can, but this would increase homeownership only during the start‐up period for the program, not in the long run. We also estimate the foregone tax revenues from the program to be in the neighborhood of $2 to $3 billion annually, once the program has reached maturity.
Concentrated Housing Code Enforcement in St. Louis
Authors: Elliott Donald S. , Quinn Michael A.
Published: October 2003

This research employs probit analysis to examine the selection criteria governing nonuniform application of concentrated housing code enforcement in the city of St. Louis. The study has three specific objectives: (1) to identify the goals and geographic selection criteria characteristic of St. Louis' concentrated code enforcement program during the twenty years that it was in effect; (2) to establish whether program goals and selection criteria changed over time and, if so, why; and (3) to provide some judgment on the value of code enforcement as a policy tool to either reverse or slow neighborhood decline. Although fundamentally a case study, the conclusions should be of interest to those concerned with conservation of the housing stock in older cities throughout the country.
Clientele Effects on the Demand For Housing Price Appreciation
Authors: Dale‐Johnson David
Published: October 2003

If house buyers are segmented by income, one might expect to observe buyers in such markets valuing the benefits of expected capital gain differently. Presumably, individuals experiencing higher marginal tax rates should be inclined to pay relatively more for anticipated capital gain since the opportunities of sheltering such income from taxation are greater. This paper attempts to identify a proxy for expected capital gain by using the hedonic price methodology to predict a recent price series for each housing unit in a sample of sales. That proxy is then used to determine an individual buyer's marginal willingness to pay for anticipated price appreciation. The results indicate that one cannot reject the joint hypothesis that homebuyers naively extrapolate from prior implied price performance to establish future price expectations and the variation in willingness to pay for that expectation may be a function of the buyer's income. This suggests the existence in housing markets of a phenomenon termed the clientele effect. This effect has been the subject of considerable examination in the finance literature.
The Impact of Real Estate Political Action Committees on Congressional Voting and Elections
Authors: Johnson Linda L.
Published: October 2003

This study examines the effectiveness of 1977–78 Real Estate Political Action Committee (REPAC) contributions in influencing voting patterns on real estate legislation. A simultaneous twenty‐one equation model is built to test relationships among the endogenous variables of votes, electoral margin, PAC contributions, and constituent and congressional ideology. The results indicate that REPAC was only minimally successful in influencing real estate votes. Results further indicate that other PAC groups were more successful in influencing voting patterns, suggesting that REPAC contribution allocation procedures could be more effective.
Measurement of the Spreads Between Yields on Various Mortgage Contracts and Treasury Securities
Authors: Hendershott Patric H. , Shilling James D. , Villani Kevin E.
Published: October 2003

Spreads between yields on different mortgage instruments and comparable maturity portfolios of Treasury securities have been computed and compared with quoted yields over the 1974–82 period for three different mortgage instruments: GNMA pass‐throughs, FHLMC participation certificates, and conventional mortgage commitments. The methodology explicitly accounts for the expected timing of the payments on the mortgages and thus avoids the cash‐flow timing problems noted in the literature.

Between late 1978 and 1981, the computed spreads rose by 30 to 40 basis points relative to those customarily quoted (the internal rate of return on a mortgage, assuming a twelve‐year life, less the yield on near‐par ten‐year Treasuries). This increase can be attributed to the rise in the level of interest rates (the compounding error in quoted mortgage yields is larger at higher levels of rates) and the change in the slope of the yield curve from flat to downward sloping (the twelve‐year prepayment date assumed in the computation of quoted GNMA and FHLMC PC yields seems to be too long).
A Note on the Bias in House Price Capitalization Models
Authors: Clauretie Terrence M.
Published: October 2003

Recent research efforts concerning the capitalization of low‐rate, seller‐supplied financing have employed hedonic pricing models that may produce biased estimates of the capitalization process. The bias results when properties sold with owner financing are included in the researcher's sample. This note discusses the nature of the bias and suggests a possible solution.
A Note on Occupancy Turnover in Rental Housing Units
Authors: Shear William B.
Published: October 2003

Occupancy turnover results from household mobility. The importance of life‐cycle effects on intra‐urban household migration are emphasized, just as have other studies on the subject. In addition, the analysis explicitly addresses the role of household moving costs and landlord occupancy turnover costs as they affect rents charged existing tenants. The empirical results indicate that landlords grant existing tenants long‐term rent discounts to reduce occupancy turnover and further suggest that the incentives of landlords to reduce turnover vary based on the age of the housing unit. The results are of special significance in the evaluation of community development programs.
The Reliability of Fair Housing Audits to Detect Racial Discrimination in Rental Housing Markets
Authors: Reid Clifford E.
Published: October 2003

Racial discrimination against black Americans continues to exert a pervasive influence on all aspects of American life. This paper investigates the reliability of two techniques currently used by local fair housing groups to measure the extent of racial discrimination in the rental housing market: in‐person audits and telephone audits. When we do not control for the presence of vacancies, we observe a moderate rate of reliability between the in‐person audits and the telephone audits. When we control for the presence of vacancies, we observe a much higher degree of reliability between the two methods used to detect racial discrimination in rental housing markets. We conclude that these techniques are useful devices to detect racial discrimination in housing markets.
Estimates of the Effect of School Desegregation Plans on Housing Values Over Time
Authors: Vandell Kerry D. , Zerbst Robert H.
Published: October 2003

This study investigates the impact that school desegregation can have on the market values of affected residential properties. It improves upon previous studies in that it is able to estimate not only the “racial enrollment” effect but also “other” desegregation‐related effects correlated with white perceptions of school quality, etc. Through the use of a controlled longitudinal and cross‐sectional data set of property sales and a ridge‐regression methodology, it is able to estimate these effects over time and separate them from amenity‐related effects. Results are significant in that they predict substantial desegregation‐related effects on house values over time, averaging 11.4% of property value, which correlate with school desegregation court rulings and other events. Furthermore, over one‐third of the magnitude of this discount is related to desegregation factors other than actual racial enrollment patterns in the schools.
The Flexible Mortgage: Optimal Financing of a Consumer Durable
Authors: Brueckner Jan K.
Published: October 2003

Given the recent flood of new mortgage innovations, it is natural to wonder what features a mortgage which is “optimal” from the consumer's point of view might possess. This paper investigates this issue, using optimal control theory to characterize the time profile of mortgage payments (as well as the value of the mortgage) that maximizes an intertemporal utility function. Among other things, the analysis shows that the optimal mortgage payment stream rises over time under reasonable assumptions, highlighting the non‐optimality of the standard flat‐payment mortgage.
Real Estate Returns: A Comparison with Other Investments
Authors: Ibbotson Roger G. , Siegel Laurence B.
Published: October 2003

Real estate returns, measured unleveraged, have been between those of stocks and bonds over 1960–1982. Due to appraisal smoothing and imperfect marketability, one must be careful about directly comparing measured real estate returns with those on other assets. It is likely, however, that low correlations with stocks and bonds make real estate a diversification opportunity for traditional portfolio managers. In addition, the issue of how various assets are priced is addressed. While stocks are priced primarily on market or beta risk, and bonds are priced primarily on interest rate and default risk, the real estate pricing mechanism includes residual risk and non‐risk factors such as taxes, marketability costs and information costs.
Toward a Model of the Office Building Sector
Authors: Rosen Kenneth T.
Published: October 2003

High rise office buildings represent large capital outlays in very competitive markets. Investment and development decisions require careful market analysis to assure sufficient demand to lease the office space at rental rates which will make the venture financially attractive. Present methodology for analyzing future commercial real estate market conditions can at best be said to be inadequate. This methodology relies on concepts such as “market absorption” rates and “normal” vacancy rates. These concepts usually rely on accounting type and trend line techniques to provide forecasts of space demand. In this paper we provide an alternative methodology for forecasting the key variables in the office space market by developing a statistical model of supply and demand. The key variables that need to be forecasted are the stock of office space (in square feet), the flow of new office construction (in square feet), the vacancy rate (in percent), and the rent for office space (net rent per square foot).
On the Assessment of Default Risk in Commercial Mortgage Lending
Authors: Vandell Kerry D.
Published: October 2003

This paper takes an initial step toward the development of an empirically‐based model of default risk assessment in the commercial mortgage market. A review of existing empirical studies of residential mortgage and commercial loan default provides evidence for appropriate model specification and estimation. A simple default risk model for commercial mortgages is then developed based upon the generalized default risk models of Jackson and Kaserman [1980] and Vandell [1981]. The model is then examined for its ability to successfully handle a variety of situations and used to test the validity of traditional ratio analysis “rules‐of‐thumb” employed in commercial lending. Ratio tests are found generally to be inconsistent with an objective of constraining default risk below some maximum. Finally, a modified ratio analysis consistent with the model and with a constrained default risk strategy is introduced.
The Separation of Real Estate Operations By Spin‐Off
Authors: Hite Gailen L. , Owers James E. , Rogers Ronald C.
Published: October 2003

In this paper, we consider spin‐offs as a vehicle to separate real estate operations from other real estate and/or non‐real estate operations. For a sample of 33 such spin‐offs announced and completed between 1962 and 1982, we document significantly positive abnormal returns around spin‐off announcements. Using the standard event‐time methodology, we find average excess returns of 5.7% in the two‐day interval surrounding the first Wall Street Journal report of a pending spin‐off. While the gains associated with spin‐offs by real estate firms are positive on average, they are small in comparison to the 9.1% two‐day announcement period abnormal returns surrounding proposals by non‐real estate firms to divest real estate operations.
Another Look at the Economics of Demand‐Side Versus Supply‐Side Strategies in Low‐Income Housing
Authors: Sa‐Aadu Jarjisu
Published: October 2003

This paper presents evidence of the relative efficiency of a particular variant of demand‐side housing strategy vis‐a‐vis the supply‐side Section 8 New Construction program. The model is cast explicitly in terms of theory of consumer behavior, allowing the estimation of price subsidy rates under the demand‐side strategy, that would yield the same welfare improvement as the Section 8 program. The results indicate that neither the latter strategy nor the former clearly dominates in terms of traditional goals of low‐income housing policy. The increases in housing consumption induced by the demand‐side strategy, while less than those from the supply‐side strategy, are significant, and are accompanied by substantial reductions in housing affordability problems (rent burdens). It is shown that anywhere from .63 to 2.16 additional households could have been served for each household served under the Section 8 program, with the demand‐side strategy, at no additional cost to the taxpayer.
Real Estate Investment Acquisition Rules for Life Insurance Companies and Pension Funds: A Survey
Authors: Webb James R.
Published: October 2003

Real estate comprises the major wealth of the United States as well as the world. Life insurance companies and pension funds are rapidly becoming major investors in real estate due to their large portfolios and annual cash inflows. Aggregate inflows of life insurance companies and pension funds are estimated to be about 150 billion dollars per year. Increasing amounts of these funds are believed to be going into real estate investments. This study surveys life insurance companies and pension managers on all facets of their real estate investments. The survey covers real estate portfolio size and type, portfolio composition, investment by property type, international investments, before‐tax analysis, after‐tax analysis, diversification strategies, computer usage, holding period assumptions and criteria for obtaining mortgages, equity positions and construction loans. The results of this study are then compared and contrasted with previous studies.
Rental Price Adjustment and Investment in the Office Market
Authors: Hekman John S.
Published: October 2003

This study presents estimates of the rental price adjustment mechanism and investment response in the office construction market using data from fourteen cities over the period 1979–1983. Market rents are seen to adjust in response to local as well as national economic conditions. Investment, as measured by building permits, responds strongly to rent in a two‐stage regression model, as well as to the long‐term growth rate of office employment. Tests for a cobweb‐type overreaction by investors do not reveal any cyclical characteristics of the market, indicating that the effects of random demand shocks are not felt beyond the normal construction period.