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The color of water: Racial and income differences in exposure to floods across US neighborhoods Real Estate Economics (IF 3.154) Pub Date : 2024-03-04 George C. Galster, Joshua Galster, Karl Vachuska
We provide a US national portrait of annual average exposure to floods across racial/ethnic and income groups, using predictions from the First Street Foundation flooding exposure model. Nationally, we find that Native Americans in inland neighborhoods and Hispanics in coastal ones face (statistically) significantly higher average exposure to flooding than non‐Hispanic Whites, even when neighborhood
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Climate risk in mortgage markets: Evidence from Hurricanes Harvey and Irma Real Estate Economics (IF 3.154) Pub Date : 2024-02-27 Pedro Gete, Athena Tsouderou, Susan M. Wachter
Using the Credit Risk Transfers (CRTs) issued by Fannie Mae and Freddie Mac, we study how, absent government intervention, mortgage markets would price hurricane risk. Currently, such risk is priced equally across locations even if it is location-specific. We hand collect a novel and detailed database to exploit CRTs' heterogeneous exposure to Hurricanes Harvey and Irma. Using a diff-in-diff specification
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Homebuyers’ geographic proximity as a predictor of future housing price growth Real Estate Economics (IF 3.154) Pub Date : 2024-02-26 Hayoung Kim
Considering the prevalent information asymmetry in housing markets, this study demonstrates the predictive power of homebuyers’ geographic proximity on housing prices. At the ZIP‐code level, a 10‐percentage‐point increase in the fraction of local buyers corresponds to a 1.1‐percentage‐point higher housing price growth over the subsequent 2 years. At the individual level, out‐of‐town buyers experience
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Investment incentives of rent controls and gentrification: Evidence from German micro data Real Estate Economics (IF 3.154) Pub Date : 2024-02-14 Vera Baye, Valeriya Dinger
We empirically document that the effectiveness of the German rent control introduced in 2015 in achieving rental housing affordability is limited. Exploring the reasons for this limited effectiveness, we focus on the impact of the rent control on the yield on rental housing investments proxied by rent-price ratios, which we derive by predicting sale prices to rental objects based on a hedonic model
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Alcohol consumption and the value of community Real Estate Economics (IF 3.154) Pub Date : 2024-02-02 Xiaoyu Zhang, Yunqi Zhang
This article investigates the value of access to alcohol consumption by examining housing price changes after a liquor ban that was catalyzed by an unexpected riot in Singapore. The ban restricts alcohol consumption in liquor control zones further than in areas outside such zones. We find that the housing price changes in the liquor control zones were weak, which implies that the utility and disutility
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Racial and ethnic differences in the financial returns to home purchases Real Estate Economics (IF 3.154) Pub Date : 2024-01-22 Matthew E. Kahn
The racial and ethnic composition of home buyers varies across geographic locations. Since home prices grow at different rates across counties and within counties, these place-based bets yield different average rates of return for different demographic groups. I estimate these differential returns by combining micro data from Home Mortgage Disclosure Act (HMDA) with zip-code-level data from Zillow
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A flexible method of housing price index construction using repeat-sales aggregates Real Estate Economics (IF 3.154) Pub Date : 2024-01-21 Justin Contat, William D. Larson
The major issue which we address in this article is the one-size-fits-all nature of the typical city-level housing price index. In this vein, we make two contributions. First, we develop a new algorithm to ensure feasible estimation of geographically granular repeat-sales price indices in cases of low transactions counts. This facilitates the estimation of a balanced panel of 63,084 U.S. Census tract-level
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ADUs in Los Angeles: Where are they located and by how much do they raise property value? Real Estate Economics (IF 3.154) Pub Date : 2024-01-07 Jan K. Brueckner, Sarah Thomaz
Using data from Los Angeles, this article explores the locational determinants as well as the assessed-value effects of the presence of accessory dwelling units (ADUs). The results show that ADUs are less likely to be found on large parcels containing newer houses and at dense locations near the CBD, the LAX airport, and beaches. ADU presence is more likely close to commercial districts, light-rail
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Do local governments tax homeowner communities differently? Real Estate Economics (IF 3.154) Pub Date : 2024-01-07 Roland Füss, Oliver Lerbs, Alois Weigand
This article investigates whether and how strongly the share of homeowners in a community affects residential property taxation by local governments. Different from renters, homeowners bear the full property tax burden, irrespective of local market conditions, and the tax is more salient to them. “Homeowner communities” may hence oppose high property taxes in order to protect their housing wealth.
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Foreign buyer taxes and housing affordability Real Estate Economics (IF 3.154) Pub Date : 2023-12-03 Andrey Pavlov, Tsur Somerville, Jake Wetzel
To improve housing affordability jurisdictions in different countries has introduced taxes on nonresident home buyers. We use the foreign buyer tax introduced in British Columbia, Canada, in August 2016 to investigate the extent to which such taxes improve housing affordability through their effect on local house prices. Our work uses direct transaction-level identification of foreign buyers that resulted
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Misreporting of second liens in portfolio mortgages and privately securitized mortgages Real Estate Economics (IF 3.154) Pub Date : 2023-12-04 Abdullah Yavas, Shuang Zhu
Using a unique nationwide mortgage servicing dataset, this paper investigates the underreporting of second liens in portfolio mortgages and compares underreporting in portfolio versus privately securitized mortgages. Portfolio loans have more than 40% of the second liens underreported. Low documentation securitized loans have a 47% (in relative terms) lower misreporting rate than observably similar
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The impact of real estate agents’ expertise on house prices and TOM Real Estate Economics (IF 3.154) Pub Date : 2023-12-04 Lu Fang, Darren K. Hayunga
This study investigates whether the expertise levels of real estate agents impact the fundamental market outcomes of transaction prices and marketing durations. A primary contribution of this article is joint examination of three knowledge categories for both listing and selling agents. Instead of the length of agents’ license periods or recent transaction volumes, the results demonstrate that the
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House price seasonality, market activity, and the December discount Real Estate Economics (IF 3.154) Pub Date : 2023-11-27 Erling Røed Larsen
In Norway, house prices tend to drop in December. This regularity is persistent across regions and over time. I exploit a transaction data set with high temporal granularity to document and estimate the size of the December discount. I control for a composition effect using a hedonic model and I control for unobserved heterogeneity by using repeat sales and involving ask prices and appraisal values
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Why do young adults coreside with their parents? Real Estate Economics (IF 3.154) Pub Date : 2023-11-27 Arthur Acolin, Desen Lin, Susan M. Wachter
Nearly one in every two adults aged 18–29 currently lives with their parents, compared to slightly more than one in four in 1960. The literature focuses on changing labor market conditions and marriage–childbearing delays to account for this shift. Using a Blinder–Oaxaca procedure, we identify a role for housing affordability, measured by market-level median housing rent or price to median household
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Down payment requirements and house prices: Quasi-experiment evidence from Shanghai Real Estate Economics (IF 3.154) Pub Date : 2023-11-20 Haopeng Shen, Hang Zhou, Zhengyi Zhou
Using the regression discontinuity design, a quasi-experiment approach, this paper establishes a causal relationship between the down payment requirement and house prices by exploiting a unique institutional background in Shanghai. In the unique setting, the required minimal down payment ratio jumps at the Inner Ring, a circular elevated highway, from 50% to 70% for a large group of buyers. With transaction
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Urban flight: A short-term phenomenon or long-term trend? Real Estate Economics (IF 3.154) Pub Date : 2023-10-11 Dongshin Kim, Davin Raiha, Youngme Seo, Julia Freybote
We investigate whether the urban flight from more to less dense locations identified by previous housing studies for the early COVID period is a temporary, pandemic-induced phenomenon, or long-term trend. We focus on the period of 2017–2022, 14,961 single-family home transactions from Southwestern Ontario, and three housing market metrics. Our results for sales price in the early pandemic periods are
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Credit supply shocks, home purchase volume, and borrowing behavior Real Estate Economics (IF 3.154) Pub Date : 2023-10-05 James N. Conklin, Haoyang Liu, Calvin Zhang
We exploit the 2007 private label securitization (PLS) freeze as a quasi-experiment to study the impact of a negative credit supply shock on home purchases and borrowing behavior. Using a difference-in-differences estimator, we show that a negative supply shock to first-lien mortgages has little impact on the volume of purchases financed with a mortgage, but significantly reduces the average first-lien
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Price predictability in liquid funds with illiquid underlying assets Real Estate Economics (IF 3.154) Pub Date : 2023-10-03 William T. Hughes, David C. Ling, Sugata Ray, Luqi Xu
Daily-priced real estate (DPRE) funds are designed to provide investors with daily liquidity while investing in illiquid private assets. DPRE fund returns are predictable, allowing for a trading strategy based on predicted returns to generate trading profits of 60–132 bps a year. Funds with higher predicted returns have higher investor flows, but the flow-to-future predicted performance relationship
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Household portfolio choice before and after a house purchase Real Estate Economics (IF 3.154) Pub Date : 2023-09-27 Ran Sun Lyng, Jie Zhou
Using a unique administrative panel data from Denmark, this article documents the dynamic evolution of households' financial wealth, the equity market participation rate (extensive margin), and the conditional risky asset share of financial wealth (intensive margin) over a 7-year period around a house purchase. We find that households' equity market participation rate falls during the year of house
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Owner-occupancy fraud and mortgage performance Real Estate Economics (IF 3.154) Pub Date : 2023-09-18 Ronel Elul, Aaron Payne, Sebastian Tilson
We identify occupancy fraud—borrowers who misrepresent their occupancy status as owner-occupants rather than investors—in residential mortgage originations. Unlike previous work, we show that fraud was prevalent in originations not just during the housing bubble but also persists through more recent times. We also demonstrate that fraud is broad-based and appears in government-sponsored enterprise
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Contemporary differences in residential housing values along historic redlining boundaries Real Estate Economics (IF 3.154) Pub Date : 2023-09-20 Aakrit Joshi, Brady P. Horn, Robert P. Berrens
Redlining refers to discriminatory lending practices based on the demographic composition of neighborhoods. The term is often attributed to boundaries drawn on maps by the Home Owners’ Loan Corporation (HOLC) in the 1930s to represent the perceived credit risk of neighborhoods. Combined with other discriminatory actions, redlining restricted access to mortgage financing for racial minorities, and areas
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Amazon is coming to town: Sequential information revelation in the housing market Real Estate Economics (IF 3.154) Pub Date : 2023-09-12 Yifan Chen, Sean Wilkoff, Jiro Yoshida
This study demonstrates that the housing market can incorporate information quickly instead of slowly over time, using Amazon's gradual revelation of its new headquarters locations in Virginia and New York. Spatial difference-in-differences analysis shows that housing prices near the Virginia headquarters exhibit 4.9%$4.9\%$ premia months before the decision, while price premia for New York reach 17
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What drives screening incentives in nonbank mortgage originators? Real Estate Economics (IF 3.154) Pub Date : 2023-09-07 Rohan Ganduri
Nonbank mortgage originators, which operate through the originate-to-distribute (OTD) model, account for more than half of all the mortgage origination in the United States. However, less is known about which factors drive the quality of mortgage originations through nonbanks. I show that an exogenous shock that reduced collateral risk for funding intermediaries of nonbank mortgage originators led
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Gun-ownership disclosure and localized home prices Real Estate Economics (IF 3.154) Pub Date : 2023-08-18 Michael J. Seiler, Liuming Yang
This article examines how the disclosure of local gun-ownership information affects property values. Using the sudden disclosure of a gun-ownership map in two New York counties, we explore how home sellers respond to this exogenous information shock. Our results show that an additional permit holder in the neighborhood leads to a 1% decrease in housing prices after the disclosure. This effect is highly
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The amenity value of natural views Real Estate Economics (IF 3.154) Pub Date : 2023-08-02 Timothy L. Hamilton, Erik B. Johnson
We estimate nonmarket values for natural views in an urban setting. These views contain the aesthetics of natural areas commonly found in public parks and open space, and offer an aspect of property valuation that previous research is unable to disentangle from proximity to parks and open space. We incorporate machine learning techniques on Google Street View images to identify natural views in an
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Deciphering the U.S. metropolitan house price dynamics Real Estate Economics (IF 3.154) Pub Date : 2023-07-27 Vasilios Plakandaras, Ioannis Pragidis, Paris Karypidis
In this article, we propose a novel estimator that builds on recent advances in heterogenous estimators to introduce the concepts of cross-sectional heterogeneity and cross-sectional dependency in the machine learning (ML) literature. The performance of the proposed method is evaluated in forecasting house prices at the county level for the 56 most populated Metropolitan Statistical Areas in the U
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Recourse as shadow equity: Evidence from commercial real estate loans Real Estate Economics (IF 3.154) Pub Date : 2023-07-18 David Glancy, Robert Kurtzman, Lara Loewenstein, Joseph Nichols
We study the role that recourse plays in the commercial real estate loan contracts of the largest U.S. banks. We find that recourse is valued by lenders as a substitute for conventional equity. At origination, recourse loans have rate spreads that are about 20 basis points lower and loan-to-value ratios that are almost 3 percentage points higher than nonrecourse loans. Dynamically, recourse affects
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Emergence of subprime lending in minority neighborhoods Real Estate Economics (IF 3.154) Pub Date : 2023-06-21 Eglė Jakučionytė, Swapnil Singh
Subprime lending is concentrated in minority neighborhoods. However, the literature provides little evidence for what led to this concentration. We use the endorsement of credit scores in mortgage underwriting by the Government Sponsored Enterprises (GSEs) in 1995 to answer this question. We show that prime lenders were substituted by subprime lenders in minority neighborhoods. As a result, the share
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Competition, agglomeration, and tenant composition in shopping malls Real Estate Economics (IF 3.154) Pub Date : 2023-05-29 David Leung, Peng Liu, Tingyu Zhou
Previous models of tenant composition in shopping malls have focused on traditional anchor and nonanchor retailers who sell similar merchandise. With the changing preferences of modern shoppers who seek unique and entertaining experiences, this article introduces a new type of store known as “specialty stores” that offer experiential consumption. Using a dynamic game model that considers the trade-off
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Duration-dependent transaction tax effects on sellers and their behaviors Real Estate Economics (IF 3.154) Pub Date : 2023-05-15 Yanjiang Zhang, Yong Tu, Yongheng Deng
We identify three interrelated behavioral outcomes of the duration-dependent seller's stamp duty (SSD) implemented in the Singaporean private housing market and examine how it reduces market liquidity. An SSD lowers lock-in home sellers’ opportunity cost of holding their properties through the lock-in period thresholds. Consequently, their selling prices are higher than non–lock-in home sellers. An
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Airbnb or not Airbnb? That is the question: How Airbnb bans disrupt rental markets Real Estate Economics (IF 3.154) Pub Date : 2023-05-15 Michael J. Seiler, Ralph B. Siebert, Liuming Yang
This study focuses on legislative bans imposed on short-term rentals (STRs) and evaluates their effects on long-term rentals in Irvine, CA. We find that contract rental prices in the long-term rental market decrease by 3.0% within approximately 2 years after the enforcement of STR ordinance. The results are primarily driven by the supply side for long-term rentals. The decline in rents is more pronounced:
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How do institutional investors react to local shocks during a crisis? A test using the COVID-19 pandemic Real Estate Economics (IF 3.154) Pub Date : 2023-05-05 David C. Ling, Chongyu Wang, Tingyu Zhou
We examine how institutional investors reacted to geographically dispersed local shocks during the early stages of the COVID-19 pandemic. A sample of real estate investment trusts (REITs) enables us to link two layers of geography: the locations of the assets in which the REITs were invested and the headquarters locations of institutional investors who owned REIT shares. We find that the institutional
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Restricted access: Real estate agent response to client race, ethnicity, gender, and side of market Real Estate Economics (IF 3.154) Pub Date : 2023-05-04 Andrew Hanson, Zackary Hawley
We design and implement a correspondence experiment to test for differences in real estate agent response across client race, ethnicity, gender, and side of market. Real estate agents are more likely to respond to White clients than Black or Hispanic clients—Whites have a 32.18% higher response rate than Hispanics and an 8.48% higher response rate than Black clients. We also find that real estate agents
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Exciting, boring, and nonexistent skylines: Vertical building gaps in global perspective Real Estate Economics (IF 3.154) Pub Date : 2023-04-27 Jason Barr, Remi Jedwab
Despite the widespread prevalence and economic importance of tall buildings, little is known about how their patterns vary across space and time. We aim to quantify differences across major world regions over time (1950–2020). To do so, we exploit novel data on the location, height (above 55 m), and year of construction of nearly all tall buildings in the world. We propose a new methodology to estimate
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Access to public capital markets and bank lending Real Estate Economics (IF 3.154) Pub Date : 2023-04-23 Yongqiang Chu, Daxuan Zhao
We examine how the cost of issuing equity affects bank lending. Using the SEC rule change that allowed exchange-listed firms with public float less than $75 million to raise equity via shelf registrations as a quasi-natural experiment, we show that the affected banks increase mortgage lending relative to control banks. Furthermore, the affected banks reduce demand for precautionary capital and become
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Climate change and commercial real estate: Evidence from Hurricane Sandy Real Estate Economics (IF 3.154) Pub Date : 2023-03-23 Jawad M. Addoum, Piet Eichholtz, Eva Steiner, Erkan Yönder
We study how professional investors capitalize flood risk in commercial real estate (CRE) markets after hurricane Sandy. We show that New York CRE exposed to flood risk trades at a large, persistent discount. CRE in Boston, which mostly escaped direct hurricane-related damage, also exhibits persistent price penalties. These price effects are driven by asset-level capitalization rates, not building
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Do opportunity zones create opportunities? The impact of opportunity zones on real estate prices Real Estate Economics (IF 3.154) Pub Date : 2023-03-18 James Alm, Trey Dronyk-Trosper, Sean Larkin
The Tax Cuts and Jobs Act of 2017 allowed governors of the 50 states to designate low-income areas as “qualified opportunity zones” (QOZs). This designation entitled investors in these QOZs to significant tax incentives, with the goal of creating economic opportunities in these areas. In this article, we estimate the impact of QOZ designation on several dimensions of economic development—residential
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Longer term housing market effects of a major US airport closure Real Estate Economics (IF 3.154) Pub Date : 2023-03-11 Jeffrey P. Cohen, Cletus C. Coughlin, Jonas Crews, Stephen L. Ross
Using a unique dataset, we examine various effects of closing Denver's Stapleton Airport, and subsequent redevelopment, on nearby housing markets. We find immediate anticipatory price effects upon announcement, but no price changes at closing and little evidence of upward trending prices between announcement and closing. Post-closure, more higher income and fewer Black households moved in, and developers
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Risk perception in housing markets: Evidence from a fighter jet crash Real Estate Economics (IF 3.154) Pub Date : 2023-03-02 Walter D'Lima, Timothy Komarek, Luis A. Lopez
In this study, we investigate the capitalization of flight accident risk in housing prices near military bases in Virginia from 2003 to 2016. We focus on a localized shock caused by a fighter jet crash into an apartment complex near the Naval Air Station Oceana in Virginia Beach. Although flight accident hazards were transparently disclosed by sellers and local governments years beforehand, the crash
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Heterogeneity in property tax capitalization: Evidence from municipalities in Wisconsin Real Estate Economics (IF 3.154) Pub Date : 2023-02-13 Sergio Gárate, Anthony Pennington-Cross
This article provides evidence that higher property taxes usually decrease property value. On average, a 10% increase in property taxes decreases property value by more than 0.34%. To control for school quality and related sorting, we estimate within-school-district property tax impacts. The effective cost of services (driven by appraisal errors or tax code changes), preferences for local services
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The price-to-rent ratio: A macroprudential application Real Estate Economics (IF 3.154) Pub Date : 2023-02-03 Sonia Gilbukh, Andrew Haughwout, Rebecca J. Landau, Joseph Tracy
We examine the potential for the price-to-rent ratio to be used as a macroprudential tool. In addition to using standardized appraisal methods, appraisers could estimate the current market rent for a property. The resulting price-to-rent ratio would provide a useful signal for speculative pressures. We show this by estimating price-to-rent ratios using the American Housing Survey. The distribution
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Where is the opportunity in opportunity zones? Real Estate Economics (IF 3.154) Pub Date : 2023-01-30 Alan Sage, Mike Langen, Alex van de Minne
In December 2017, the U.S. Congress passed into law the Opportunity Zone (OZ) program. As an OZ, designated low-income census tracts provide considerable tax breaks to property investors, intending to attract investments and spur economic growth. As the success of the program is dependent on investors' responses, we analyze market reactions in a difference-in-differences framework. We identify two
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Nature of comovements in US state and MSA housing prices Real Estate Economics (IF 3.154) Pub Date : 2023-01-23 Alan Tidwell, Yan (Olivia) Lu, Junsoo Lee, Piyali Banerjee
This study analyzes the time-varying nature and determinants of comovements in US housing prices using state and metropolitan statistical area (MSA) data. We employ dynamic factor models with time-varying loadings and stochastic volatility (DFM-TV-SV) to estimate the national, regional, and state factors. The time-varying factor loadings and stochastic volatility features enrich the dynamic factor
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The economic effects of real estate investors Real Estate Economics (IF 3.154) Pub Date : 2023-01-19 Carlos Garriga, Pedro Gete, Athena Tsouderou
We show five new results about small- and medium-sized real estate investors (SMREI) who participate through legal entities in US housing markets. First, SMREI have the largest growth across all cities post Great Recession, in contrast to Wall Street Landlords who concentrate in superstar cities. Second, SMREI increase house price growth and price-to-income ratio, especially in the bottom price tier
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School quality as a catalyst for bidding wars and new housing development Real Estate Economics (IF 3.154) Pub Date : 2023-01-10 Crocker H. Liu, Patrick S. Smith
We provide new evidence of the demand for better schools as manifested in bidding wars and changes to the built environment. Using repeat sales before and after a redistricting, we exploit shocks to school quality arising from the continuous, unexpected redistricting of school attendance boundaries in Atlanta. We find that houses redistricted to higher (lower) quality schools are more (less) likely
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Fighting vacation rental tax evasion through warnings to potential evaders Real Estate Economics (IF 3.154) Pub Date : 2023-01-09 Julio López-Laborda, Jaime Vallés-Giménez, Anabel Zarate-Marco
This paper uses differences-in-differences to analyze the effectiveness of messages sent by the Spanish Tax Agency to deter tax evasion by owners of vacation rentals. The results suggest that these messages were effective in the aggregate, as there was an increase both in the declared amount of such income (6–8.5%, depending on the line item under which it is declared) and in the number of filers (29
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Uncertainty premia in REIT returns Real Estate Economics (IF 3.154) Pub Date : 2022-12-29 Marton Lotz, Daniel Ruf, Johannes Strobel
We provide a systematic study of how financial and real estate uncertainty affect the aggregate return performance of the U.S. REIT market from 1994 to 2017. A temporal causality analysis reveals a negative uncertainty impact on REIT returns. The asset pricing analysis confirms the predictive relation and suggests that REITs are statistically significantly exposed to changes in market-wide uncertainty
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The remote work revolution: Impact on real estate values and the urban environment: 2023 AREUEA Presidential Address Real Estate Economics (IF 3.154) Pub Date : 2022-12-26 Stijn Van Nieuwerburgh
The covid-19 pandemic induced a major shift in the prevalence of remote and hybrid work arrangements. This review article studies the effects of this remote work revolution for residential and commercial real estate values and for the future of cities. It also discusses consequences for productivity, innovation, local public finance, and the climate. The last part of the article discusses policy interventions
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Lenders’ pricing strategy: Do neighborhood risks matter? Real Estate Economics (IF 3.154) Pub Date : 2022-12-13 Sumit Agarwal, Yongheng Deng, Jia He, Yonglin Wang, Qi Zhang
This article explores the different pricing strategies of lenders who originate both government-sponsored enterprise (GSE) and non-GSE loans. We find that conditional on loan and borrower characteristics and some observable local economic factors, mortgage rates on GSE loans vary significantly across regions. However, we observe no sizable regional variation in loan amounts or default risk. By contrast
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The riskiness of outstanding mortgages in the United States, 1999–2019 Real Estate Economics (IF 3.154) Pub Date : 2022-12-05 William D. Larson
This article introduces measures of credit risk for all outstanding mortgages in the United States between 1999 and 2019. Terminations play a fundamental role in offsetting risk introduced by new originations because of refinance activity and the often dual nature of home buyers as concurrent sellers. To illustrate these concepts in a policy setting, I show that the Home Affordable Refinance Program
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Distressed comps Real Estate Economics (IF 3.154) Pub Date : 2022-11-22 James N. Conklin, N. Edward Coulson, Moussa Diop
We consider the use and impact of distressed properties as comparables in residential appraisals. First, we describe the incidence of their use and their relative comparability; second, we estimate their impact on the appraisal value itself; and third, we consider their impact on the probability that the appraisal is below the proposed transaction price. We find, generally, that distressed comps are
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Testing machine learning systems in real estate Real Estate Economics (IF 3.154) Pub Date : 2022-11-18 Wayne Xinwei Wan, Thies Lindenthal
Uncertainty about the inner workings of machine learning (ML) models holds back the application of ML-enabled systems in real estate markets. How do ML models arrive at their estimates? Given the lack of model transparency, how can practitioners guarantee that ML systems do not run afoul of the law? This article first advocates a dedicated software testing framework for applied ML systems, as commonly
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Conflicts of interest and agent heterogeneity in buyer brokerage Real Estate Economics (IF 3.154) Pub Date : 2022-11-16 Lawrence Kryzanowski, Yanting Wu, Tingyu Zhou
This article investigates the incentives of agents working with buyers (buying agents) under the fixed percentage commission system and the implications on housing market outcomes. Our model shows that the absence of a binding contract creates a risk of losing clients for buying agents, which helps mitigate the conflict of interest between buying agents and their clients. Both the buying agent's prediction
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Time-varying connectedness of metropolitan housing markets Real Estate Economics (IF 3.154) Pub Date : 2022-11-11 James E. Payne, Xiaojin Sun
We construct a time-varying measure of connectedness for 382 U.S. metropolitan housing markets using monthly house price data from 1975 to the present. Housing connectedness in the long run is found to be much stronger than the instantaneous connectedness, both of which exhibit notable variation over time and across metropolitan areas. Unlike stock market connectedness, housing market connectedness
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Face-to-face interactions, tenant resilience, and commercial real estate performance Real Estate Economics (IF 3.154) Pub Date : 2022-10-25 Chongyu Wang, Tingyu Zhou
We study the impact of face-to-face (FTF) interactions on commercial real estate (CRE) performance. By linking tenants, properties, and CRE firms, we construct three novel FTF measures that capture tenant remote working, internal communication between coworkers, and external contact with customers. Using the COVID-19 pandemic as an exogenous shock to the FTF economy, we find that firms holding properties
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Externalities of residential property flipping Real Estate Economics (IF 3.154) Pub Date : 2022-10-25 Lingxiao Li, Abdullah Yavas, Bing Zhu
This study investigates whether flipping activities impose an externality on the transaction prices of the neighboring nonflipped properties. Using a data set of residential property transactions in Clark County, Nevada for the period 2003–2013, we find that flippers impose a significant positive impact on the price of neighboring nonflipped properties in an up market, but a significant negative effect
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Top-floor discounts in residential buildings: Evidence from South Korea Real Estate Economics (IF 3.154) Pub Date : 2022-09-19 Sam Il Myoung Hwang, Leo Ma
This study assesses the phenomenon of resale price discounts for top-floor units of residential buildings, or “top-floor discounts.” Using 1.9 million resale transactions of apartment units from South Korea, we find that top-floor discounts range from 1.3% to 8.3% of resale prices. We hypothesize that top-floor discounts exist because of larger heating/cooling costs for these units relative to those
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Ethnicity in housing markets: Buyers, sellers and agents Real Estate Economics (IF 3.154) Pub Date : 2022-09-19 Natalya Bikmetova, Geoffrey K. Turnbull, Velma Zahirovic-Herbert
This paper examines how ethnicity related to cultural differences arising from ethnic background affects housing market transactions in the Atlanta metro area. Using both the US Census and Wikipedia approaches to infer ethnicity from individuals' names, we find that the interplay of buyer, seller, and agent ethnicity composition affects interaction in the housing market. Sellers working with listing
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The capitalization of metro rail access in urban housing markets Real Estate Economics (IF 3.154) Pub Date : 2022-09-16 Zachary T. Keeler, Heather M. Stephens
Increasing access to public transportation (including metro rail) can help alleviate traffic congestion and address climate and environmental priorities. Living close to a metro line may be especially important in terms of providing improved commuting options. However, proximity to metro lines can also be associated with negative externalities, such as noise and crime, that may make living near a station