bluuebunny/crossref_metadata_2025 huggingface dataset:
The Commission's Recommendations on Housing Finance
Authors: Grebler Leo
Published: October 2003

The Commission proposes radical changes in the structure of institutions supplying residential mortgage funds. By massive broadening of their asset and liability powers, the thrifts are to become quasi‐banks. The resulting housing credit gap is to be filled by multipurpose lenders, notably pension funds, and by greater use of mortgage securities backed by conventional as well as FHA and VA loans. For these changes, the Commission relies on the magic of deregulation, initiated partly in the Depository Institutions Act of 1982. A mortgage investment tax credit is proposed to cushion adverse effects on housing, but its adoption is highly unlikely. The Commission's expectations of structural reform through deregulation are overdrawn. Hence, its approach would probably reduce resource allocation to housing. The assertion that the new system would be more efficient is not supported by the meager analysis offered in the Report. Likewise, the claim of greater cyclical stability of mortgage lending remains unsubstantiated. The Commission also recommends curtailment of federal programs supporting the private housing sector: restricting FHA to high‐risk loans and phasing down the GNMA guaranty of mortgage securities. But the proposals for FNMA and FHLMC stop short of cutting their umbilical cords of government.
Managing Mortgage Interest‐Rate Risks in Forward, Futures, and Options Markets
Authors: Seiders David F.
Published: October 2003

This article reviews the Housing Commission's perspective and recommendations on management of interest‐rate risks in housing finance, and considers the relative advantages of various techniques by which institutions on the supply side of mortgage markets can absorb or shift such risks. It is argued that exchange‐based options can provide a more reliable way than cash forward contracting for originators or purchasers of mortgages to manage commitment‐period risk, but that commitment fees charged household borrowers should not fully correspond to premiums for put options “traded” on the exchanges. It also is argued that exchange‐based futures can provide a more effective and economical way than asset‐liability maturity matching in cash markets for thrift institutions to manage portfolio interest‐rate risks; in particular, futures trading can permit these institution to meet the maturity preferences of liquidity‐conscious creditors and risk‐averse borrowers, to reduce the risk associated with unexpected shifts of the yield curve, and to maintain a higher degree of asset quality. The capacity of futures markets to handle large‐scale hedging by mortgage market participants will depend upon heavy participation by highly leveraged speculators who are willing to take long positions without the receipt of substantial risk premiums from hedgers.
Mortgage Pass‐Through Securities: Progress and Prospects
Authors: Seiders David F.
Published: October 2003

This paper discusses the Housing Commission's perspective and recommendations on mortgage pass‐through securities markets, reviews federal policy toward such securities in the wake of the Housing Commission Report, and considers prospects for mortgage securities in the housing finance system of the future. Concerning the outlook, it is concluded that massive “securitization” of housing finance may not be inevitable–contrary to the developing conventional wisdom on this topic–partly because the underlying need for secondary market transactions may not be as strong as commonly expected. Furthermore, the relative importance of pass‐through securities as secondary market vehicles may erode if federally related programs are phased down in line with Housing Commission recommendations, even if policies currently being developed within the Administration to improve the functioning of fully private securities markets are implemented.
The Tax Treatment of Mortgage Investment
Authors: Tuccillo John A.
Published: October 2003

This paper examines the theoretical and empirical justifications for replacing the special bad‐debt reserve deduction currently accorded to thrifts under federal tax law with a mortgage interest tax credit. It presents the background to the recommendations of the President's Commission on Housing that such a change be employed as a short‐term tax incentive to mortgage investment and compares a system in which all mortgage investors received the bad‐debt deduction with one in which all receive a tax credit. The conclusion is that the credit is superior to the deduction on theoretical grounds although it is difficult to predict with certainty the impacts of such a change in tax policy on total mortgage investment.
An Empirical Examination of the Stability of Housing Price Equations Over Time
Authors: Mark Jonathan H.
Published: October 2003

This study investigates the extent to which the coefficients of housing price equations are stable over time. Using annual data from 1959 to 1979 for a large neighbourhood in Vancouver, British Columbia, a series of twenty‐four housing price equations is estimated. The estimated coefficients exhibit substantial instability over the period. Further, prediction errors are generally minimized for a given year when the coefficients estimated for that year are used to predict. The results strongly suggest that such equations should be recalibrated each year.
Urban Housing Markets Modelling: Short‐Run Equilibrium Implications
Authors: Bajic Vladimir
Published: October 2003

This paper tests for the existence of short‐run equilibrium in the urban housing market in Metropolitan Toronto. The alternative hypothesis is the housing market segmented with respect to locational and structural attributes. We found insignificant differences in attribute prices across hypothesized submarkets. This implies that an unstratified hedonic price regressions model, based on the assumption of short‐run equilibrium, is equally efficient in the analysis of housing prices as a model based on a number of subsamples stratified along lines of segmentation.
Interest Rate Risk, Residential Mortgages and Financial Futures Markets
Authors: Gau George W. , Goldberg Michael A.
Published: October 2003

Residential mortgage markets in both the United States and Canada have recently been dominated by instruments such as variable‐rate and short‐term rollover mortgages which require borrowers to assume a greater burden of interest rate risk. An outstanding question is whether this approach to risk allocation is Pareto optimal or whether there are other more effective methods of dealing with the risk created by interest rate volatility. This study examines the potential for shifting this risk from the mortgage market to the financial futures market. After considering the rationale for expecting that neither mortgage borrowers nor lenders wish to absorb the high levels of risk present in the existing financial environment, this study discusses the hedging of interest rate risk through financial futures markets. Empirical tests are then performed to evaluate the effectiveness of U.S. futures markets for hedging positions from the U.S. mortgage market. These results indicate that the interest rate risk inherent in residential mortgages can be substantially shifted through one or more positions in the existing futures contracts and long‐term, fixed‐rate mortgages may still be financially feasible under conditions of interest rate volatility.
The Effect of Mortgage Rate Buydowns on Housing Prices:
Authors: Agarwal Vinod B. , Phillips Richard A.
Published: October 2003

The model developed in this paper analyzes the effect of builder‐financed FHA‐VA mortgage subsidies or buydowns on the price of housing. Hedonic pricing equations are estimated for a locationally and qualitatively uniform sample of new tract development homes. The explanatory variables are vectors of physical and financial characteristics. The latter include a continuous variable for discount points paid by builders which is indicative of the magnitude of prepaid finance charges. The results indicate that a substantial portion of mortgage subsidy costs are shifted to buyers in the form of inflated housing prices.
Anticipated Growth and the Specification of Debt in Real Estate Value Models
Authors: Lusht Kenneth M. , Fisher Jeffrey D.
Published: October 2003

Standard value models for investment real property do not distinguish between current income and future growth in estimating the probable level of debt financing. Analysis of loan commitment data from 1971–1981 suggests that this was not a proper assumption during that period. Consistent with recent models from the literature of the firm, the portion of the value of investment properties attributable to anticipated growth apparently supported less dept than did current income.
Analyzing the Temporal Stability of Appraisal Model Coefficients: An Application of Ridge Regression Techniques
Authors: Moore James S. , Reicheri Alan K. , Cho Chien‐Ching
Published: October 2003

The use of multiple regression analysis as a tool of real estate valuation has received considerable attention in recent years. The primary objectives of this study are to investigate the multicollinearity among the property characteristics (regressor variables) and examine the stability of the estimated regression coefficients over time. Ridge regression techniques are used to partially adjust for the presence of collinearity. The results indicate that the ridge regression model provides a consistent set of properly signed, statistically significant regression coefficients throughout the sample period. Furthermore, ridge regression techniques are shown to have certain advantages over those of ordinary least squares for establishing logical and consistent values for specific property characteristics.
Housing Attributes Associated with Capital Gain
Authors: Dale‐Johnson David , Phillips G. Michael
Published: October 2003

Housing units are heterogeneous goods. Rates of change in housing prices are typically modelled as if they arise from factors unrelated to the housing unit itself. For example, housing price increases in the latter part of the 1970s and early 1980s are argued to have arisen primarily from demographic factors and the differential effects of inflation on the effective rate of taxation on income from corporate capital and on owner‐occupied housing. Cross‐sectional variation in price inflation is not addressed. Consumers who purchased housing units are not indifferent to their attributes. To the extent that expectations vary within regional housing markets as a consequence of variation in housing attributes, standard linear hedonic price regression may generate biased estimates of implicit prices. This paper identifies sufficient conditions for the estimates of implicit prices in linear hedonic price regressions to be unbiased and generate unbiased estimates of implied price changes. Finally, this paper identifies living space (house size) as a significant attribute related positively to the increase in individual housing prices in a regional market.
Application of Logit Analysis to the Determination of Tenant Absorption in Condominium Conversion
Authors: Diskin Barry A. , Tashchian Armen
Published: October 2003

Frequently, when an analyst is faced with categorical or nominal data, the statistical technique selected is limited to crosstabulation (contingency table) analysis. Logit analysis overcomes some of the problems typically associated with the contingency table‐type analyses. This paper demonstrates the application of logit analysis to solve a real estate marketing problem. Specifically, logit analysis is used to assist in the identification of tenant‐buyers in condominium conversion projects.
Reduced Form Coefficients, Structural Coefficients, and Mortgage Redlining
Authors: Ostas James R.
Published: October 2003

Empirical studies of redlining have long been plagued with the identification problem. Observed behavior in alleged redlined areas is ultimately a combination of both demand and supply influences coming from both mortgage and housing markets. How then can inferences from reduced form experiments be utilized to provide unambiguous structural information concerning purely lender behavior? This problem is analyzed in detail with the help of an implicitly specified skeletal model of the mortgage and housing markets. The results suggest that structural inferences from reduced form information are, indeed controversial at best. Although this fact is fairly widely known at present, many research techniques still utilize an underlying reduced form methodology. It is hoped that the methodology employed in this paper highlights the identification problem in a manner that will generate greater insight into this issue. Some remedies are suggested in line with the general econometric literature dealing with structural identification.
FNMA Mortgage Purchase Commitments As Put Options: An Empirical Examination
Authors: Berry Thomas D. , Gehr Adam K.
Published: October 2003

The Federal National Mortgage Association (FNMA) auctions commitments to purchase mortgages. An examination of the terms of the commitment contract shows that these commitments are actually put options on mortgages. The contract is unusual, however, in that the price of the commitment is a fixed percentage of the value of the mortgages. In the auction, the dealers effectively bid the exercise price at which they would be willing to pay the fixed commitment price.

In this paper, we study the economics of the FNMA auction. We use a two‐state approximation to the American put pricing model for interest‐dependent securities to examine the behavior of the auction results. We find that the model performs reasonably well for several years — giving results which are, on the average, correct — and then, quite abruptly, the performance of the model deteriorates. Some possible reasons for this result are then examined.
A Simple Model of Mortgage Insurance
Authors: Brueckner Jan K.
Published: October 2003

This paper uses a two‐period model to analyze the borrower's choice of an optimal time pattern of mortgage payments in a world where future house values are uncertain. Since a decline in values can make the borrower's equity negative, leading to default on the mortgage, lenders in the model will require the purchase of mortgage insurance. The premium on the insurance policy will depend on the riskiness of the mortgage, which in turn depends on the magnitude of the initial mortgage payment. Mortgages with large (small) first payments will carry low (high) insurance premiums. Taking this fact into account, the borrower decides on the optimal riskiness of his mortgage. Borrowers who discount the future heavily choose risky mortgages carrying high insurance premiums, while those who place a higher value on future consumption opt for less risky contracts carrying low (or zero) premiums.
Return, Risk and Cost of Equity for Stock S&L Firms: Theory and Empirical Results
Authors: Lee Cheng F. , Lynge Morgan J.
Published: October 2003

This study examines the current deregulated environment for and the financial position of savings and loan associations. It is argued that in a less regulated, more competitive environment managers of savings and loan associations will have to become more proficient in using financial management techniques to assure the survival and the return to profitability of their associations. One aspect of financial management is a more careful estimation of and use of the cost of equity capital, especially for the increasing number of associations that have converted from mutual to stock organizations. Different approaches to the estimation of the cost of equity capital are discussed and monthly stock prices of 35 stock savings and loan associations are used to estimate representative costs of equity capital.
Valuing Depreciable Real Estate: A New Methodology
Authors: Ling David C. , Whinihan Michael J.
Published: October 2003

The same factors that determine the current market price of a property also determine the price of a future investor will pay for that property. Previous researchers had no means available to endogenize future resale prices and future optimal holding periods. Using dynamic programming, we simultaneously determine both a price path and the corresponding optimal holding periods for all owners during the economic life of an income‐producing property. The model can be extended to the problem of estimating real rent patterns from observed patterns of used property prices.
Managerial Incentives: Implications for the Financial Performance of Real Estate Investment Trusts
Authors: Solt Michael E. , Miller Norman G.
Published: October 2003

In the face of informational asymmetry, REIT equity investors may bear the costs of agency. Hence, it is in shareholders' interests to pay incentive fees to induce managers to utilize their superior information and to take suitable actions that reduce these costs. In this paper, the relation between financial performance and fees paid, and between fees paid and contractual incentives, are examined to determine whether equityholder interests are being served by the decisions of REIT managers. The data reveal that fees paid and financial performance are positively related, indicating that financial performance is at least partially endogenous with respect to managerial action. Moreover, the evidence also suggests that the industry fee structure has changed over the period in a manner that appears to have reduced the agency costs borne by equityholders, and by the end of the sample period the fees paid in general seem to reflect incentives that are consistent with the wealth maximization goal of equityholders.
Measuring the Efficiency Cost of Rent Control
Authors: Vitaliano Donald F.
Published: October 2003

This paper estimates the burden of lost producer surplus imposed on landlords by rent control. The approach employed measures the reduction in Marshallian quasi‐rent from the side of the derived demand for factors rather than the short‐run supply of housing.

A constant elasticity of substitution production function is employed to derive the input demand equation. The equation is estimated using post‐war rent control data from five major New York State cities. It turns out that rent control reduced quasi‐rent about 15%. The deadweight loss is estimated at 1.5% of gross rental payments or about 5% of net income before debt charges.
Using Latent Root Regression to Identify Nonpredictive Collinearity in Statistical Appraisal Models
Authors: Reichert Alan K. , Moore James S.
Published: October 2003

The objective of this study is to examine the potential benefits of using latent root regression techniques to improve the stability of appraisal coefficients (hedonic prices) over time. Another related objective is to more clearly identify the nature and implications of collinearity present in most appraisal models. The results indicate that the majority of the collinearity present in the data is of a predictive nature, hence latent root techniques will likely show little or no improvement over OLS models.
Market Versus Assessed Values of Industrial Land
Authors: Kowalski Joseph G. , Colwell Peter F.
Published: October 2003

The purpose of this paper is to identify the manner in which parcel scale, micro‐location, and macro‐location influence the market values and the assessed values of parcels zoned for industrial use. The implicit prices exhibited by the market for industrial parcels in the west suburbs of Detroit are somewhat different than those which are embodied in the assessment process in the same area. The market exhibits plattage (i.e., a value increment from subdivision), but there is little recognition of it in the assessment process. Also, there appears to be no recognition of the market frontage effect in the assessment process, and assessors appear to have different views of the importance of industrial parks than estimates from the market indicate would be appropriate. However, the market and assessment models are remarkably similar with regard to the impact of north‐south location and landfill permits.
Reducing the Error in Monthly Housing Starts Estimates
Authors: Goodman John L.
Published: October 2003

This paper describes a method for developing estimates of total monthly housing starts that are more accurate than the published Census Bureau figures. The technique makes use of the facts that (1) estimated building permit issuance is subject to far less sampling error than is the starts estimate and (2) permit issuance and starts bear a strong contemporaneous correlation. The conclusion is that monthly housing starts and monthly building permit issuance should be assigned nearly equal weights in developing an improved estimate of total housing starts.
Market Share in the Real Estate Brokerage Industry
Authors: Colwell Peter F. , Marshall David W.
Published: October 2003

This paper is concerned with the factors that determine the market share of listings and the market share of sales for brokerage firms. Models are developed and tested in a SMSA that conveniently corresponds exactly to a particular Multiple Listing Service area. Indices of firm specialization and market concentration were computed in addition to more conventional characterizations of the market and the data used in the study.

The regression results reveal a small degree of consistency in the impacts of the explanatory variables over the two years of the study and over the listing and sales markets. The number of salespeople is the most consistently significant variable. Indeed, market share per salesperson appears to be a non‐monotonic function of the number of salespeople. The presence of a franchise and the quantity of display advertising are occasionally significant. Classified advertising, Yellow Pages advertising, and open houses all do not significantly affect market share per salesperson.
Housing and the Weather
Authors: Goodman John L.
Published: October 2003

Monthly readings on housing construction and sales that are at odds with expectations are often attributed to unusual weather conditions. This paper examines the empirical relationship between weather abnormalities and housing activity. The conclusion is that unseasonable weather patterns have, at most, a slight impact on total housing starts, home sales, and the pace of construction activity. Even this weak effect is found only during the winter months. Sampling error accounts for much more of the month‐to‐month changes in measured housing activity than does the weather, and there is a general tendency to exaggerate the influence of unusual weather on the monthly national housing data.
Central City Revitalization: A Predictive Model
Authors: Melchert David , Naroff Joel L.
Published: October 2003

The object of this paper is to increase the understanding of the gentrification process by developing a set of representative indices that could be used to assess the likelihood of gentrification occurring in a central city neighborhood. Using Boston, Massachusetts as a representative city, economic, housing, social and amenity variables were collected from the 1970 U.S. Census. A sample of blocks that did and did not revitalize after 1970 was chosen. As the gentrification outcome was known with certainty, a logistic regression model was estimated. The estimated model quite accurately classified the neighborhoods into their respective grouping, resulting in a block‐level statistical model of housing revitalization.
An Investigation of the Major Influences of Residential Liquidity: A Multivariate Approach
Authors: Moore James S.
Published: October 2003

The liquidity of the single‐family home has been potentially compromised by prevailing conventional mortgage market conditions in the 1980s. The primary objectives of this study are to investigate the degree of liquidity of a given residence, defined to incorporate both the “recovery‐of‐value” and “timeliness” dimensions, and the major influences upon such liquidity. The multivariate techniques of canonical correlation and multiple discriminant analysis are employed to identify those property characteristics and/or prevailing mortgage market conditions that most appreciably influence the liquidity of a residential listing.
An Evaluation of the One‐Time Capital Gains Exclusion for Older Homeowners
Authors: Newman Sandra , Reschovsky James
Published: October 2003

This paper provides an evaluation of the one‐time capital gains exclusion for older homeowners. This provision was largely intended to prevent large capital gains tax liabilities from locking older households into current, and possibly inappropriate, housing. We find the exclusion facilitates a modest number of moves, through not entirely of the downscaling type intended by Congress. Among beneficiaries, the distribution of benefits appears to be highly regressive. Modest benefits are also found to be enjoyed by the real estate and mortgage industries. Revenue losses are estimated and found to be significantly larger than estimates provided by the Treasury Department.
Effective Property Tax Rates and Capital Formation Issues: Manvel, Acton and Darby
Authors: Buckley Robert M. , Simonson John
Published: October 2003

Using comparatively new data sources, this study estimates that effective property tax rates on taxable capital declined nearly 50% in the U.S. during the decade of the 1970s, a phenomenon generally overlooked or understated in previous studies. Recognition of this halving of property tax rates permits at least a partial explanation for a number of otherwise unexplained macroeconomic occurrences during the 1970s, particularly the smaller‐than‐anticipated interactive effects of inflation and the income tax on interest rates, on the one hand, and on capital allocation, on the other. The clear implication is that greater attention must be paid to trends in effective property tax rates in understanding and predicting important economic behavior.
On Option‐Pricing Models in Real Estate: A Critique
Authors: Shilling James D. , Sirmans C.F. , Benjamin John D.
Published: October 2003

This paper considers the problems peculiar to options on real estate, because of the special set of institutional factors influencing real estate markets. It is intended to serve as a reply to Johnson and Wofford [15] as well as provide an overall critique of option‐pricing models in a real estate context. Our major point is that a variety of real estate decisions, such as the abandonment decision, the option to refinance, or the option to exercise a contingent real estate purchase contract, may be modeled using option‐pricing techniques. However, both the theoretical and institutional aspects of real estate markets must be taken into account in both developing and applying option models in a real estate context.
Derivation of Cost of Capital and Equity Rates from Market Data
Authors: Guntermann Karl L. , Smith Richard L.
Published: October 2003

Use of the discounted cash flow (DCF) technique in investment and appraisal situations depends on readily available and reliable estimates of cost of capital and equity rates. Previous research on estimating equity rates and cost of capital from financial data sources is extremely limited and includes no evidence on the consistency of rates derived from alternative data sources. This paper derives estimates of equity rates and cost of capital from three alternative commonly available data sources. Estimates are derived separately for operating properties and for homebuilder/land developers on both a before‐ and after‐corporate tax basis. The alternative data sources are found to yield consistent and reliable estimates of equity rates and cost of capital. Rates estimated from these sources are sufficiently accurate and reliable for most investment or appraisal applications.
The Impact of Interstate Foreclosure Cost Differences and the Value of Mortgages on Default Rates
Authors: Clauretie Terrence M.
Published: October 2003

Previous research on mortgage default has focused on the costs, benefits, and characteristics of the mortgagor. In such studies default rates have been taken as a measure of mortgage risk. In this paper we present a model where the position of the lender affects the default‐foreclosure process. Important to the lender's decision to foreclose rather than renegotiate an existing loan are the value of mortgage and the legal costs associated with foreclosure.

The empirical evidence supports the hypothesis that both the value of the mortgage and legal foreclosure costs affect the foreclosure rate. In those states where legal foreclosure costs are high rates are significantly less than where costs are low. This suggests that previous models which include only the costs and benefits of default to the borrower are incomplete and that foreclosure rates can not be taken as a strict measure of mortgage risk. That is, low foreclosure rates may indicate that losses occur in other forms of loan negotiation rather than in expensive legal costs.
Economic Effects of Racial Integration: An Analysis of Hedonic Housing Prices and the Willingness to Pay
Authors: Gabriel Stuart A.
Published: October 2003

This study evaluates household economic effects stemming from neighborhood racial integration in Oakland, California. To that end, housing market data are applied to estimate hedonic price and willingness‐to‐pay functions for neighborhood racial composition. Results of the analysis indicate the problematic nature of the constant willingness‐to‐pay assumption and suggest this standard method may underestimate the household economic effects of racial integration. The paper concludes with implications for neighborhood integration policy.
Forecasting Using Long‐Order Autoregressive Processes: An Example Using Housing Starts
Authors: Sklarz Michael A. , Miller Norman G. , Gersch Will
Published: October 2003

A long autoregressive (AR) modeling procedure for monthly U.S. housing starts data is considered. Neither differencing to remove the trend, nor differencing to remove the seasonal component is required in this method. The model is fitted by a Householder transformation‐Akaike AIC criterion algorithm. Forecast performance is compared to that obtained by the Box‐Jenkins ARIMA method. The prediction error variance of the long AR model method tends to be smaller than the prediction error variance of the Box‐Jenkins model method. The long AR method is well suited for housing market time‐series which are characterized by both strong seasonal and slowly changing trend components.
Pricing Efficiency in the Mortgage Market
Authors: Edmister Robert O. , Merriken Harry E.
Published: October 2003

Traditionally, the presence of serial correlation has been presumed to indicate an inefficient market for financial assets. As Latham [15] discusses, while the absence of serial correlation implies market efficiency, its mere presence does not imply inefficiency. Rather, market efficiency is a characteristic of security pricing. This study investigates pricing efficiency in the mortgage market. Using mortgage loan quotations for 343 institutions over a 71‐week period, the empirical findings show that a wide variety of mortgage contracts are efficiently priced.
Public Real Estate Limited Partnership Returns: A Preliminary Comparison with Other Investments
Authors: Kapplin Steven D. , Schwartz Arthur L.
Published: October 2003

Real Estate Limited Partnership (RELP) securities have attracted substantial investor interest, but limited research study. This paper, utilizing a very recent database of actual RELP secondary market transactions, provides preliminary evidence regarding the relative performance of RELP securities, as well as the interrelationships between RELP returns and the returns of Treasury bills and bonds and common stock. Results suggest that RELP returns are negatively correlated with common stock returns, but are positively correlated with the rate of inflation. RELP returns do not consistently exceed the rate of inflation nor do they exceed common stock returns. RELP returns also failed to outperform a broadly‐based income property index.
The Effect of Lead Paint Abatement Laws on Rental Property Values
Authors: Ford Deborah Ann , Gilligan Michele
Published: October 2003

Lead paint is a source of childhood lead poisoning, a vicious disease with high costs to both the victims and society. Treatment of the disease requires placing the victim in a lead‐free environment. Laws have been enacted by many localities, which would require removal of lead from residential property. However, property owners have resisted the enforcement of these laws with threats of abandonment. Theory suggests that abandonment will occur only if the value of the rental property after removal of the paint is less than the cost of removal. This paper shows that these costs have already been discounted into property values. Data from Baltimore, Maryland indicates that the market has placed a value of approximately $15,250 per structure or $3,813 per rental unit on expected abatement costs. This value in most cases is less than the value of the rental property. Thus abandonment should occur infrequently.
The Real Estate Pricing Puzzle
Authors: Lusht Kenneth M.
Published: October 2003

The state‐of‐the‐art with respect to pricing real estate is similar to that with respect to pricing securities just prior to the development of the CAPM. Reading the entrails of real estate markets, however, has proven a formidable task, and the problem is not limited to inadequate data. Perhaps the most important lesson to date is that available pricing models are not up to the task.
The Effect of Alternative Return Measures on Restricted Mixed‐Asset Portfolios
Authors: Webb James R. , Rubens Jack H.
Published: October 2003

A restricted portfolio is constructed which includes NYSE common stocks, corporate bonds, government bonds, small capitalization common stocks, residential real estate and farmland and returns for each of four different tax brackets (0%, 15%, 30%, 45%). Next, three alternative measures of rates of return for residential real estate and farmland are used. Finally, since some researchers believe that standard risk measures (variance and standard deviation) do not capture the total risk in real estate, the risk for the real estate returns is increased five times while the returns are held constant. The twenty–four optimal portfolios (four tax brackets with two measures of risk and three measure of return for residential real estate and farmland) are then derived. These results are then compared and contrasted to each other to ascertain the change in sensitivity of the optimal portfolios due to different tax rates, different rates–of–return estimates and different risk estimates.
Managing the Short‐Term Interest Rate Exposure Inherent in Adjustable Rate Mortgage Loans
Authors: Heuson Andrea J.
Published: October 2003

This paper develops a model for determining the level of, and changes over time in, the short‐term interest rate exposure contained in adjustable rate mortgage loans (ARMs). Results of the study indicate that movements in the underlying adjustment index can create both upward‐movement or downward‐movement interest rate risk for lenders whose ARMs carry rate adjustment limits. The model presented here is useful for designing hedging strategies for ARM loans, and for analyzing the impact of new originations on the interest rate exposure of the ARM portfolio.
Toward an Evolutionary Theory of Trade Associations: The Case of Real Estate Appraisers
Authors: Jaffe Austin J.
Published: October 2003

This paper proposes a developmental theory of trade association life cycles with special emphasis on the case of real estate appraisers. Given a neo‐institutional perspective of the demand for appraisal services, the paper views real estate appraisers as information specialists. Trade associations tend to develop along a common, although not strictly fixed, set of steps. At each stage, various institutional activities occur that when observed, can be used to characterize the association's rate of development. In this context, real estate appraisers and their institutions are examined. Recent advances provide evidence that major changes are currently underway.
Rankings of Contributing Authors to the AREUEA Journal by Doctoral Origin and Employer: 1973–1987
Authors: Sa‐Aadu J. , Shilling James D.
Published: October 2003

This paper reports on the rankings of the contributing authors to the AREUEA Journal, the origins of their doctoral degrees, and their employers from 1973–1987. Articles in the Journal were identified as being either finance, investment, valuation, housing, and urban and regional. The rankings suggest that approximately 28% of the contributing authors have managed repeat appearances. The rankings also indicate that over 74 different institutions have awarded doctoral degrees to AREUEA Journal contributors and more than 180 different institutions have employed them.
Price Strategies for Idiosyncratic Goods—The Case of Housing
Authors: Read Colin
Published: October 2003

We determine the mechanism that a rational, profit‐maximizing seller would use to revise his reservation price for a heterogeneous or infrequently exchanged good. For instance, while one dimension of a home's quality may be easily determined in competitive markets (e.g., the valuation of floor size, location, etc.), other dimensions of quality may be idiosyncratic (unit specific) and unobservable by the seller (e.g., aesthetics of the home). Here, a seller of a new or infrequently exchanged housing unit may use sales success information to revise his expectation of the unit's market‐determined value and hence revise his reservation price. The rational seller will, upon arrival of the first buyer inspecting the unit, determine a sequence of reservation prices for this and expected subsequent buyers. This price sequence falls for subsequent buyers and starts from a lower initial price if the first buyer arrives later than expected. Through this mechanism, we offer an explanation for price dispersion and vacancy durations in housing markets. While we explicitly model the real estate market here, this price revision mechanism is also applicable to rental markets, labor markets, used car markets, and other markets characterized by heterogeneity and infrequent sales.
Morphogenesis of
Bacillus
Spore Surfaces
Authors: Chada Venkata G. R. , Sanstad Erik A. , Wang Rong , Driks Adam
Published: October 2003

Spores produced by bacilli are encased in a proteinaceous multilayered coat and, in some species (including
Bacillus anthracis
), further surrounded by a glycoprotein-containing exosporium. To characterize bacillus spore surface morphology and to identify proteins that direct formation of coat surface features, we used atomic-force microscopy (AFM) to image the surfaces of wild-type and mutant spores of
Bacillus subtilis
, as well as the spore surfaces of
Bacillus cereus
569 and the Sterne strain of
Bacillus anthracis
. This analysis revealed that the coat surfaces in these strains are populated by a series of bumps ranging between 7 and 40 nm in diameter, depending on the species. Furthermore, a series of ridges encircled the spore, most of which were oriented along the long axis of the spore. The structures of these ridges differ sufficiently between species to permit species-specific identification. We propose that ridges are formed early in spore formation, when the spore volume likely decreases, and that when the spore swells during germination the ridges unfold. AFM analysis of a set of
B. subtilis
coat protein gene mutants revealed three coat proteins with roles in coat surface morphology: CotA, CotB, and CotE. Our data indicate novel roles for CotA and CotB in ridge pattern formation. Taken together, these results are consistent with the view that the coat is not inert. Rather, the coat is a dynamic structure that accommodates changes in spore volume.
Requirement of theListeria monocytogenesBroad-Range Phospholipase PC-PLC during Infection of Human Epithelial Cells
Authors: Gründling Angelika , Gonzalez Mark D. , Higgins Darren E.
Published: October 2003

In this study, we investigated the requirement of theListeria monocytogenesbroad-range phospholipase C (PC-PLC) during infection of human epithelial cells.L. monocytogenesis a facultative intracellular bacterial pathogen of humans and a variety of animal species. After entering a host cell,L. monocytogenesis initially surrounded by a membrane-bound vacuole. Bacteria promote their escape from this vacuole, grow within the host cell cytosol, and spread from cell to cell via actin-based motility. Most infection studies withL. monocytogeneshave been performed with mouse cells or an in vivo mouse model of infection. In all mouse-derived cells tested, the pore-forming cytolysin listeriolysin O (LLO) is absolutely required for lysis of primary vacuoles formed during host cell entry. However,L. monocytogenescan escape from primary vacuoles in the absence of LLO during infection of human epithelial cell lines Henle 407, HEp-2, and HeLa. Previous studies have shown that the broad-range phospholipase C, PC-PLC, promotes lysis of Henle 407 cell primary vacuoles in the absence of LLO. Here, we have shown that PC-PLC is also required for lysis of HEp-2 and HeLa cell primary vacuoles in the absence of LLO expression. Furthermore, our results indicated that the amount of PC-PLC activity is critical for the efficiency of vacuolar lysis. In an LLO-negative derivative ofL. monocytogenesstrain 10403S, expression of PC-PLC has to increase before or upon entry into human epithelial cells, compared to expression in broth culture, to allow bacterial escape from primary vacuoles. Using a system for inducible PC-PLC expression inL. monocytogenes, we provide evidence that phospholipase activity can be increased by elevated expression of PC-PLC or Mpl, the enzyme required for proteolytic activation of PC-PLC. Lastly, by using the inducible PC-PLC expression system, we demonstrate that, in the absence of LLO, PC-PLC activity is not only required for lysis of primary vacuoles in human epithelial cells but is also necessary for efficient cell-to-cell spread. We speculate that the additional requirement for PC-PLC activity is for lysis of secondary double-membrane vacuoles formed during cell-to-cell spread.
A Mutant of
Paracoccus denitrificans
with Disrupted Genes Coding for Cytochrome
c
550
and Pseudoazurin Establishes These Two Proteins as the In Vivo Electron Donors to Cytochrome
cd
1
Nitrite Reductase
Authors: Pearson Isobel V. , Page M. Dudley , van Spanning Rob J. M. , Ferguson Stuart J.
Published: October 2003

In
Paracoccus denitrificans
, electrons pass from the membrane-bound cytochrome
bc
1
complex to the periplasmic nitrite reductase, cytochrome
cd
1
. The periplasmic protein cytochrome
c
550
has often been implicated in this electron transfer, but its absence, as a consequence of mutation, has previously been shown to result in almost no attenuation in the ability of the nitrite reductase to function in intact cells. Here, the hypothesis that cytochrome
c
550
and pseudoazurin are alternative electron carriers from the cytochrome
bc
1
complex to the nitrite reductase was tested by construction of mutants of
P. denitrificans
that are deficient in either pseudoazurin or both pseudoazurin and cytochrome
c
550
. The latter organism, but not the former (which is almost indistinguishable in this respect from the wild type), grows poorly under anaerobic conditions with nitrate as an added electron acceptor and accumulates nitrite in the medium. Growth under aerobic conditions with either succinate or methanol as the carbon source is not significantly affected in mutants lacking either pseudoazurin or cytochrome
c
550
or both these proteins. We concluded that pseudoazurin and cytochrome
c
550
are the alternative electron mediator proteins between the cytochrome
bc
1
complex and the cytochrome
cd
1
-type nitrite reductase. We also concluded that expression of pseudoazurin is mainly controlled by the transcriptional activator FnrP.
Increasing the Ratio of Soj to Spo0J Promotes Replication Initiation inBacillus subtilis
Authors: Ogura Yoshitoshi , Ogasawara Naotake , Harry Elizabeth J. , Moriya Shigeki
Published: October 2003

The ParA and ParB protein families are well conserved in bacteria. However, their functions are still unclear. InBacillus subtilis, Soj and Spo0J are members of these two protein families, respectively. A previous report revealed that replication initiated early and asynchronously inspo0Jnull mutant cells, as determined by flow cytometry. In this study, we examined the cause of this promotion of replication initiation. Deletion of both thesojandspo0Jgenes restored the frequency of replication initiation to almost the wild-type level, suggesting that production of Soj in the absence of Spo0J leads to early and asynchronous initiation of replication. Consistent with this suggestion, overproduction of Soj in wild-type cells had the same effect on replication initiation as in thespo0Jnull mutant, and overproduction of both Soj and Spo0J did not. These results indicate that when the ratio of Soj to Spo0J increases, Soj interferes with tight control of replication initiation and causes early and asynchronous initiation. Whereas replication initiation also occurred significantly earlier in the twospo0Jmutants,spo0J14andspo0J17, it occurred only slightly early in thesojK16Qmutant and was delayed in thesojG12Vmutant. Although Soj localized to nucleoids in thespo0Jmutants, the two Soj mutant proteins were distributed throughout the cell or localized to cell poles. Thus, interestingly, the promotion of replication initiation seems to correlate with localization of Soj to nucleoids. This may suggest that Soj inhibits transcription of some cell cycle genes and leads to early and asynchronous initiation of replication. In wild-type cells Spo0J counteracts this Soj function.
Biochemical Properties and Regulated Gene Expression of the Superoxide Dismutase from the Facultatively Aerobic Hyperthermophile
Pyrobaculum calidifontis
Authors: Amo Taku , Atomi Haruyuki , Imanaka Tadayuki
Published: October 2003

Superoxide dismutase (SOD) was purified from a facultatively aerobic hyperthermophilic archaeon,
Pyrobaculum calidifontis
VA1. The purified native protein from aerobically grown cells exhibited 1,960 U of SOD activity/mg and contained 0.86 ± 0.04 manganese and <0.01 iron atoms per subunit. The gene encoding SOD was cloned and expressed in
Escherichia coli
. Although the recombinant protein was soluble, little activity was observed due to the lack of metal incorporation. Reconstitution of the enzyme by heat treatment with either Mn or Fe yielded a highly active protein with specific activities of 1,970 and 434 U/mg, respectively. This indicated that the SOD from
P. calidifontis
was a cambialistic SOD with a preference toward Mn in terms of activity. Interestingly, reconstitution experiments in vitro indicated a higher tendency of the enzyme to incorporate Fe than Mn. When
P. calidifontis
was grown under anaerobic conditions, a majority of the native SOD was incorporated with Fe, indicating the cambialistic property of this enzyme in vivo. We further examined the expression levels of SOD and a previously characterized Mn catalase from this strain in the presence or absence of oxygen. Northern blot, Western blot, and activity measurement analyses revealed that both genes are expressed at much higher levels under aerobic conditions. We also detected a rapid response in the biosynthesis of these enzymes once the cells were exposed to oxygen.