Local market and national components in house price appreciation

2015

This first chapter uses neighborhood vacancies as a proxy for foreclosures and examines their impact on the value of surrounding neighborhood properties. Often, the negative spillover of a foreclosure results from decay of the foreclosed property. Existence of a foreclosure within a neighborhood is proxied for by a vacant structure within 300 feet of the observed unit, resulting in a lower bound foreclosure externality. Using the special neighbor sample of the American Housing Sample waves 1985, 1989 and 1993, small neighborhoods are observed and categorized into racially different neighborhoods (black, integrated or white neighborhood). Additionally, neighborhood-specific averages are constructed, such as mean income, crime and other characteristics. Estimating an hedonic housing price model, this study finds a decrease of about 15 percent for houses located within close proximity to a vacant structure. The effect is even bigger, approximately 18.5 percent, if a house is located ne...

Journal of Urban Economics, 1986

This paper reports a first application of Fair-Jaffee type short-side models of disequilibrium to the intraurban single family housing market in which the housing stock is divided into distinct geographic community areas. Data on single family dwelling transactions and prices in the city of Chicago between 1972-1976 is used to estimate four versions of the Fair-Jaffee type model. The approach allows the simultaneous estimation of the price elasticity of the demand for and offer of existing single family dwellings. The demand elasticity estimate of about-0.5 agrees with other estimates in the literature obtained from equilibrium models. The price elasticity of offer has not been previously estimated for single family dwellings. It is found to be around 2.1. Elasticities are also computed with respect to the mortgage interest rate and the intensity of transactions in the dwelling's community area. The disequilibrium models appear substantially superior to equilibrium specifications. Simulations with the estimated models predict that, in the absence of external shocks, transaction prices and quantities stabilize within 2 years. Q 1986 Academic Press. Inc.

2008

This thesis consists of six empirically-based papers. Collectively, the papers contribute to the understanding of the spatial variation in housing prices within regional housing markets. The main ambitions have been to identify what contributes significantly to explain the spatial variation in housing prices within such markets, and to account for this variation in econometric models. The thesis focuses primarily on macroscopical and general spatial structural characteristics, rather than on characteristics relevant for a specific region or a specific neighborhood. A summary of the theory underlying hedonic models and a review of the relevant literature are included, in addition to a chapter on various estimators from the spatial econometrics literature. According to the thesis there are two main global factors contributing significantly to explain the intraregional spatial variation in housing prices. These are the urban attraction effect measured by distance from the central business district (cbd), and labor market accessibility. The gravity-based labor market accessibility measure used in the thesis represents a useful approximation towards being able to study how changes in accessibility may manifest themselves and exert a spillover effect on housing prices throughout a region. Relevant kinds of experiments are performed in the thesis. As an example, these experiments show that an increase in the number of jobs in an urban area only marginally influences the spatial distribution of house prices. The impact on local housing prices is predicted to be considerably larger if the job growth is concentrated to the peripheral zones. The decentralization of jobs is hence found to contribute towards levelling out the differences in housing prices between the urban and peripheral zones. Even though the two globally-defined measures of spatial structure characteristics explain a major part of the spatial variation in housing prices, we also find that some locally-defined measures are relevant. The existence of subcenters, for instance, contributes significantly towards explaining spatial variation in housing prices. A model that includes both the urban attraction effect and labor market accessibility is shown to be useful for predictive purposes, particularly in relation to changes in the spatial distribution of jobs. In cases where one does not have detailed information on the spatial distribution of jobs, the cbd gradient captures both the urban attraction and the labor market accessibility effect. As an example, such a parsimonious model-formulation is demonstrated to offer reliable predictions of the variation in housing prices between a centre and the periphery. This conclusion might, however, be changed in a more polycentric area than the one studied here. I am grateful to Professor Roger Bivand at the Norwegian School of Economics and Business Administration. His competence in spatial statistics and willingness to spend time with me discussing statistical questions, programming in R, and even developing algorithms in spdep suitable for the type of data used in the thesis, has been important. I also wish to thank real estate agents in Haugesund for providing data and for taking part in discussions regarding some of the results. I have benefited from discussions with many good colleagues at Stord/Haugesund University College. I also want to thank Arnstein Gjestland and Gisle Kleppe for technical assistance. Paul Glenn has improved the English in various occasions. In general, it has been a pleasure to work with the librarians at the University College. They provide services beyond what could be expected. The deans at my department have been very accommodating, and any problem has been solved with ease. Stord/Haugesund University College has provided the necessary equipment, and has covered all my expenses during the project. More privately, I am grateful to my mother and to Arne for practical ground support. This has contributed to our everyday life being much easier and far more pleasant. My thoughts also go to my husband, and to our two children. With the help of incentives but without arguing, Hanne and Torbjørn have helped with cleaning our house before weekends. Tor, I highly appreciate the delicious dinners that are ready when I come home from work. Thank you for your patience and caring support.

2002

,In this paper we investigate the relationship between race and appreciation in the value of owner- occupied homes with tract-level data for six metropolitan areas. Appreciation in the value of one’s home is important because it is has historically been the primary mechanism for the accumulation of wealth among middle-class Americans. As Oliver and Shapiro (1995) have eloquently argued,

Journal of Urban Economics, 1980

2011

This paper reviews the role of house prices in influencing private consumption and residential investment in OECD countries. Deregulation of the mortgage markets in most OECD countries since the 1970s has made it easier for households to borrow for current consumption on the basis of their housing wealth, and the easing of borrowing constraints has often been accompanied by sizeable withdrawal of housing equity. The analysis presented in the paper and a review of existing empirical work for the major OECD countries suggest that house prices have a significant positive impact on private consumption through wealth effects and/or an easing of liquidity constraints. House prices also influence the profitability of house building, and in many countries there is a close association between profitability of house construction and private residential investment. A corollary of these results is that residential property prices can be useful indicators of demand pressures in the economy.

Journal of Urban Economics, 1975

This paper presents estimates of land value change and other measures of real estate value change for the Boston area's 78 towns and cities over the past 100 years. A flattening of the real estate value gradient over time is demonstrated. Given the pattern of land ownership in the Boston area, a higher rate of value increases at greater distances from the center is shown to imply a regressive distribution of capital gains with respect to wealth among the homeowner population. Returns to homeowning are compared with returns to alternative business assets indicating some possible factors in the persistence of wealth inequality.

Journal of Urban Economics, 1996

This paper examines the variation in the rates of price appreciation within an individual metropolitan market. A methodology is developed to examine the Ž. locational variation in house price changes in Dade County Miami Florida, from 1971 to 1992. House price appreciation appears to be somewhat spatially related; that is, it varies by municipality, with distance from the CBD, with local changes in population and housing units, and by ethnic mix. However, these relationships have minimal explanatory power. Controlling for the census tract group location of each Ž. home explains only around 12% of the residual variation in the appreciation of individual homes that is not explained by metropolitan-wide changes in house prices. The effect of tract group location appears to be dominated by the idiosyncratic influences of individual homes and their immediate environments.

2019

This thesis collects three papers studying topics related to housing markets, taxation, and macroeconomics. In Chapter 1, I study how capital and housing should be taxed. I formulate a housing model where credit is limited and the ability to invest capital varies across households. I calibrate the model to U.S. data and use it to determine the effect of housing and capital income taxation on the housing market and societal welfare. My main finding is that housing should be taxed at a positive rate and capital income should be subsidized. On the one hand, the housing tax raises housing costs for both renters and home-owners. On the other hand, the capital income subsidy encourages the most productive households to increase their capital investments, and thus, wages paid to labor rise. Since wages rise more rapidly than housing costs, overall welfare rises. I am deeply indebted to the members of my supervisory committee. I thank Gueorgui Kambourov, Burhanettin Kuruscu, and Joseph Steinberg for their time, patience, and guidance. I am grateful for everything I have learned from them. I have also greatly benefited from insightful discussions with many faculty members at the University of Toronto. In particular, I would like to mention Diego Restuccia, Murat Celik, and Ronald Wolthoff. I also want to thank Ashique Habib, Baxter Robinson, and Sabina Georgescu for their help and support, which contributed to the completion of this thesis. I dedicate this thesis to my parents and sister, Nary, Rina, and Hilla Rotberg for their continuing encouragement throughout my degree.