Papers by Isaac Megbolugbe
Urban Studies, Oct 1, 1991
The availability of reliable measures of housing programme benefits is important for decisions th... more The availability of reliable measures of housing programme benefits is important for decisions that planners make about appropriate housing policies. This paper advocates the use of hedonic price estimation techniques for the direct measurement of housing programme benefits in developing countries without restrictive characterisations of housing demand. A market-weighted economic welfare index is used to measure the housing benefits. The benefits are the difference between estimated hedonic price equations before and after the implementation of a programme summed across all households and then multiplied by the cash equivalent of a unit of hedonic value. The cash value of a unit of hedonic value is determined by dividing the observed aggregate market value of houses in an analysis sample by the estimated aggregate hedonic value for that sample. Measuring housing programme benefits from direct market valuation of programme-induced changes in housing attributes does not imply that such programmes are necessarily efficient means of delivering services to residents. Nevertheless, the hedonic approach enables policy-makers to consider the opportunity cost for participants through robust analysis.
Journal of economic and social measurement, Apr 1, 1991
Hedonic measurement of housing quality is normally based on a wide range of data including inform... more Hedonic measurement of housing quality is normally based on a wide range of data including information on structural, neighborhood, and geographic attributes of the housing stock. Readily accessible tax assessment database across many U.S. communities typically contain limited data on housing structural attributes. It is always very expensive to augment such variables with additional data on housing neighborhood and location. Consequently, hedonic estimation of quality based on these limited data perennially suffers specification bias. Because few hedonic variables are capable of proxying the statistical influence of omitted ones, there is really no need for more expensive data that some analysts insist are necessary for proper use of hedonic index to make housing quality judgments. This makes tax records a valuable source of information for hedonic estimation.
Social Science Research Network, 1992
... Related papers. 1. Impacts of housing and mortgage market discrimination racial and ethnic di... more ... Related papers. 1. Impacts of housing and mortgage market discrimination racial and ethnic disparities in homeownership. Susan M Wachter, Isaac F Megbolugbe (1992). ... RD Alba, JR Logan (1992). The International migration review. ...
Urban Studies, May 1, 1993
ABSTRACT
Oxford University Press eBooks, Sep 4, 2014
Social Science Research Network, Oct 26, 1999
A pricing model is developed for a reverse mortgage contract where the borrower receives payments... more A pricing model is developed for a reverse mortgage contract where the borrower receives payments either as a lump sum or in an annuity while the loan balance accumulates as a claim against the house. No underwriting criteria on income are applied. One risk of default is that the borrower will remain in the house after the negatively amortizing loan balance exceeds the value of the house. An explicit pricing model of the reverse mortgage permits the evaluation of this default "crossover" option. Alternative methods involving life insurance contracts and securitization are compared as secondary market channels.
SSRN Electronic Journal, 1992
... Related papers. 1. Impacts of housing and mortgage market discrimination racial and ethnic di... more ... Related papers. 1. Impacts of housing and mortgage market discrimination racial and ethnic disparities in homeownership. Susan M Wachter, Isaac F Megbolugbe (1992). ... RD Alba, JR Logan (1992). The International migration review. ...
Http Dx Doi Org 10 3905 Jfi 1998 408225, Feb 22, 2009
Private Real Estate Markets and Investments, 2014
Urban Studies, 1991
The availability of reliable measures of housing programme benefits is important for decisions th... more The availability of reliable measures of housing programme benefits is important for decisions that planners make about appropriate housing policies. This paper advocates the use of hedonic price estimation techniques for the direct measurement of housing programme benefits in developing countries without restrictive characterisations of housing demand. A market-weighted economic welfare index is used to measure the housing benefits. The benefits are the difference between estimated hedonic price equations before and after the implementation of a programme summed across all households and then multiplied by the cash equivalent of a unit of hedonic value. The cash value of a unit of hedonic value is determined by dividing the observed aggregate market value of houses in an analysis sample by the estimated aggregate hedonic value for that sample. Measuring housing programme benefits from direct market valuation of programme-induced changes in housing attributes does not imply that suc...
Urban Studies, 1996
This special issue of Urban Studies is devoted to papers that were origina lly presented at a sym... more This special issue of Urban Studies is devoted to papers that were origina lly presented at a symposium held in September 1995 on the occasion of William G. Grigsby’ s retirement from the faculty of the University of Pennsylvania. The symposium was organised by the Wharton Real Estate Center and the Of® ce of Housing Research of the Federal National Mortgage Association. The participants were asked to develop papers stemming from their present work, while broadening their perspective to the national or international context. Global economic changes over the last decade and a half have necessitated a shift in housing and urban policies in many OECD countries towards a stronger market-oriented approach and a decreasing government role in housing and urban development. The same global competitive forces have resulted in labour market shifts in OECD countries, requiring innovative and more ̄ exible housing systems that adjust to labour requirements. In the short run, these changes have led to deepening urban poverty and greater isolation of urban poverty groups, not only in the US but also in other industrialised countries. These trends have serious repercussions, far beyond housing condition s, for the social organisation of urban areas. They have generated a new round of debates among policy-makers, private and non-governmental housing-sector players and housing scholars. Together with other urban scholars, Grigsby laid the foundation for our understanding of the dynamics of housing markets and the related residential and social isolation of urban lower-income and minority popula tions in the US. Grigsby’ s retirement, after his 40-year career of teaching and research, offered an opportune moment to organise a symposium that would bring together many of his former and present colleagues and students to revisit their joint work, expand on it by placing it in the context of urban policy experiences of industrial countries other than the US, and emerge with new insights relevant to present social and economic urban policy dilemmas. Apart from a paper by Louis Rosenberg which was earlier published in the Journal of Housing Studies , all the symposium papers are included in this issue. The papers can be grouped into three broad areas.
Journal of Real Estate Literature, Sep 1, 2007
Abstract An apparent paradox is the coexistence of excess demand by patients for medical services... more Abstract An apparent paradox is the coexistence of excess demand by patients for medical services and excess supply by hospital and nursing home providers. The vacancy rate of licensed hospital and nursing home beds has been rising even as the total number of beds and hospitals has been declining as rates are regulated. This paper examines alternative explanations for this paradox. One explanation is that since providers receive similar rates from public and private insurers and other third-party payers regardless of quality, the healthcare sector effectively operates as a price-regulated industry. There is an incentive to carry excess capacity. A second is that the separation of capital and operating budgets leads to added construction even if unnecessary or redundant. A third explanation is that excess capacity is a convenience with an option value that allows patients and providers to have staff and hospital beds available at any time and location. This paper examines real estate as it applies to the delivery of medical services. The focus is on the provider or supply side of medical care services. Medical services can be delivered from a variety of locations and facilities. These range from a hospital to seniors housing to at-home care. Which location and facility is least costly and most efficient for treatment delivery depends on the disease, provider, and treatment protocol. A supply-side approach contrasts with the existing literature that focuses primarily on the demand side of medical services with emphasis on patient access and treatment costs. The demand-side research has extensive analysis on rationing by price regulation and treatment length-of-stay limits. The managers and determiners of demand are doctors and insurers. Doctors establish whether a patient requires a stay in a healthcare real estate facility such as a hospital or nursing home, or can be treated as an outpatient or sent home. Insurers control how long a stay in a hospital is required, conditional on the diagnosis. Sometimes insurers can propose alternative procedures. Excess demand, as in any real estate market, should lead to price rationing. Instead, the healthcare real estate sector has a positive and rising vacancy rate of hospital and nursing home beds. The vacancy rate, or proportion of unoccupied licensed hospital beds, has been rising. This rise has occurred even as the total number of beds and hospitals has been declining. In 1975, the United States had nearly 1.5 million licensed hospital beds. By 2002, the bed count had declined to less than one million. Onethird of capacity was eliminated in a generation. Even with the smaller bed count, on an average night, more than one-third of hospital beds are empty. This proportion is remarkably similar to the vacancy rate at hotels. A similar excess capacity exists for nursing homes. Vacancy rates indicate rising real estate excess capacity even as the healthcare system imposes price and quantity regulations normally associated with excess demand. In the hospital sector, this paradox exists even as the incentive to generate revenue and profit has increased. More than 85% of hospital beds in the U.S. are owned by entities outside of federal, state, and local governments. Federal hospitals as opposed to community, all-comer institutions, maintain an exclusive clientele as those for the Veterans Administration, mental institutions, and in prisons. State and local hospitals have been declining in number, and lessening their mission to treat the very poor, which leaves for-profit and traditional non-profit community hospitals. The latter are largely managed by for-profit management companies on a model well-established in other real estate markets, such as for office, industrial, apartments, and hotel. Public policy requires open access of emergency rooms to all-comers regardless of ability to pay. Unlike other real estate facilities, hospital admission is controlled not by users but by intermediaries including public and private insurers. …
Oxford University Press eBooks, Sep 4, 2014
Private Real Estate Markets and Investments, 2014
Housing Policy Debate, 1992
... Goodman (1988) intro-duced into the literature two ratios: a house-specific ratio and a ... T... more ... Goodman (1988) intro-duced into the literature two ratios: a house-specific ratio and a ... The impact of racial (ethnic) variables on tenure choice and housing demand has two aspects. ... tastes, but includes some choices that are based not on preferences but on discrimination. ...
Journal of Real Estate Literature, 2007
Journal of Real Estate Research, 1991
Journal of Housing Research, 1998
This article proposes a cohort method for modeling longitudinal changes in homeownership attainme... more This article proposes a cohort method for modeling longitudinal changes in homeownership attainment. Theory underlying the method draws on two research traditions: labor economists' research on the economic mobility of immigrants and housing economists' research on homeownership over the life cycle. The modeling technique was applied to native-born, non-Hispanic whites, native-born Mexican Americans, and Mexican immigrants and was used to estimate trajectories of homeownership attainment by birth cohort and arrival cohort from 1980 to 1990. The results show that temporal factors such as cohort membership, aging, and duration of U.S. residence are strong predictors of homeownership attainment. The results also show that the adjusted homeownership trajectories of younger nativeborn, non-Hispanic whites and Mexican Americans lag behind those of older cohorts.
The bulk of the literature on analysis of the potential of the US housing finance markets to serv... more The bulk of the literature on analysis of the potential of the US housing finance markets to serve underserved population and areas has been based almost exclusively on mortgage lending business models. Some authors even examined how far the industry could go in expanding homeownership opportunities if income or credit constraints were totally relaxed in mortgage loan underwriting. There is no doubt that the 1990s saw record homeownership rates and major strides in closing the gap between majority and minority homeownership rates. Despite the various demographic challenges that the industry confronted, lenders made important inroads in increasing low-income homeownership. New marketing techniques, aggressive outreach and availability of loans with increasingly higher loan to value ratios contributed to these gains. Armed with more sophisticated underwriting standards, new product types, and a mandate for experimentation, the housing finance industry attacked down payment and credit standards that constrained borrowing for many families on the margin of homeownership. One concern that has arisen is that the excessive focus on the mortgage side of homeownership financing leaves new homeowners overleveraged. Increased mortgage debt imposes a risk of default and of affordability. It causes homeowners to reallocate cash budgets to debt service, thereby reducing cash available for other expenditures. Another problem is that mortgage debt receives favorable tax treatment, including deductibility in computing taxable income. Low- and moderate-income buyers have by definition low- and moderate income. Therefore they benefit relatively less from the tax advantages of debt. The cost of capital for any household is a weighted average of the cost of equity and the cost of debt. For a given cost of equity capital, a household with a low or zero marginal tax rate has a higher after-tax cost of debt capital. Therefore the cost of capital is higher for low- and moderate-income households, and that is accentuated by emphasizing leverage, or debt finance. A third problem is the impact of leveraged finance on the physical stock of housing capital. If leveraged homeowners tend to default, and that leads to foreclosures, there is a contagion of low-quality housing in a given neighborhood. Leveraged housing finance creates a negative externality. The long-time homeowner with relatively low leverage sees a decline in housing values caused by the entry of risky and leveraged neighbors. Some of these problems can be resolved with shift of focus to the equity side of the cost of capital for homeownership. Consequently, this paper discusses methods for financing housing for low-income households to emphasize equity instead of debt. First, the paper examines the various problems that low-income households have with the current debt-orientated homeownership financing system. With a zero marginal tax rate these households do not benefit from the deductions for mortgage interest or tax-free imputed rent. With substandard collateral and characteristics, these borrowers typically do not qualify for conventional financing. The result is that conventional financing accounts for less than one-third of the housing finance taken up by low-income households. The other two-thirds consists of loans with explicit government backing and sub-prime private lenders charging higher rates and under constrained conditions. Given their lack of wealth, low-income borrowers fund equity informally through mutual pooling arrangements or unrecorded debt. Of course, many more simply do not become owners. Second, the paper models a three-tiered instrument involving equity, mezzanine finance and debt. // Equity: Pooling. Equity markets are enhanced by formalizing pooling contracts, such as rotating savings and credit accounts widely used by low-income borrowers, targeting at least 5% down payments. // Mezzanine: Credit enhancement. Mezzanine finance comes through pools providing 15% to 20% of the house price placed as debt or equity. The credit enhancement allows debt finance and limits the loan-to-value ratio to 80%. // Debt: Conventional plus. The debt is a hybrid between the conventional market and subprime, targeting borrowers who cannot qualify conventionally. Potential homeowners save for equity through savings accounts that allow rotating lump-sum draws. Contingent on the size of their down payment, a mezzanine fund provides additional funding at closing. The return on the fund is from a premium over the conventional prime mortgage rate and either an equity position or a look-back second mortgage with no payment. The homeowner receives an interest in the mezzanine fund. The paper examines the implications of securitizing the mezzanine fund, leading to a tradable security backed by home equity shares, the last large illiquid asset in wealth. // The paper concludes with a discussion of key market impacts of a housing financing regime that shifts its…
Third World Planning Review, 1983
N igeria is labelled one of the 'middle income countries' in the Third World because of its annua... more N igeria is labelled one of the 'middle income countries' in the Third World because of its annual gross national product per capita grovvth rate of 3.6 per cent between 1960 and 1977 resulting in a GNP per capita of US $420.00 in 1977. 1 Associated with the economic gro\\•th prospects of the country was an equally compelling rapid rate of urbanisation. Although the annual rate of urbanisation in Nigeria has since declined to 4.6 per cent between 1970 and 1975 from a level of 5.1 per cent in the 1950s, a rate of 4.6 per cent per annum still indicates a rapid rate of urbanisation. 2 As is well known, the rapid expansion of urban population makes problematic the adequate provision of infrastructural facilities such as electricity, transportation and communication services. It also creates problems in providing medical, educational and recreational facilities. 3 Perhaps the most outstanding of all the urban problems (caused by the rapid expansion of urban population) is that of providing adequate housing facilities for the teeming urban population. This litany of urban problems is all too familiar." Nevertheless, opinions still diverge as to whether or not the apparent negative results that have systematically attended the various policy paths followed in most less developed countries reflect a misconception of the dynamics of the urban gro\\'th in these countrics.t This question is particularly relevant in Nigeria today in view of the failures of most housing programmes of the government. It is true that housing policies for urban low-income and middle-income families in most less developed countries have typically stressed the public supply of fully serviced 'standard' housing units." What is disturbing about the Nigerian experience is the continued pursuance of this course despite devastating experiences from these other countries. Public housing projects have failed to achieve their primary objectives of serving the urban low-income families in Nigeria. The high cost of standard housing construction coupled with extremely low effective demand by a majority of the urban population has resulted, deliberately or by default, in retargeting of these public housing programmes to the middleand high-income minorities. Where targeted as intended, the implementation has required high public subsidies so that it has benefited no more than 5-6 per cent of the urban lovvincome population." This has been the experience of Nigeria as a country since political independence in 1960. Yet, the federal government continues to pursue a policy of direct construction of housing
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Papers by Isaac Megbolugbe