Housing Market Dynamics
Friday, Jan. 5, 2024 8:00 AM - 10:00 AM (CST)
- Chair: Carlos Hurtado, University of Richmond
Investors in Housing Markets: Comparing Two Booms
AbstractWe conduct a large-scale data analysis to compare housing investors in the periods before and after the Global Financial Crisis (GFC). Post-GFC investors differ from pre-GFC investors in several key ways: They are less likely to use leverage, are residents in wealthier and more educated areas, and are more sophisticated. They have a buy-and-hold strategy, are less likely to sell in response to capital gains and more likely to hold properties longer in response to rental yields. These differences have implications for market liquidity and monetary policy transmission sensitivity. Moreover, post-GFC investors are less susceptible to behavioral biases.
Housing Market and Capitalization of Information: Case of Land Leases
AbstractWe study how the announced future land rent increases capitalize into leasehold apartment prices. We investigate a case, where the City of Helsinki, Finland, announced over 15-fold rent increases for the ground lease contracts on residential land that were expiring in the near future. Our empirical strategy is based on a difference-in-differences design where we compare transactions of the leasehold units with those of near-identical freehold apartments. We find that before the first rent increase episode homebuyers were inattentive to their expected long-run housing expenses, which resulted in significant overpricing of leasehold apartments relative to corresponding freehold units. The results further suggest that housing market participants react on announced contract renewals and appear to learn the importance of the ground ownership feature when they are exposed to more and more information regarding rental contract updates.
An Index of Local Zoning: How Does It Correlate with House Prices?
AbstractThe regulation of land use through zoning in the United States is a complex matter, as it is the responsibility of numerous local authorities, including municipalities and counties. Consequently, there exists considerable variation in zoning ordinances from one jurisdiction to another, making it challenging to assess the impacts of zoning on a large scale. While the literature recognizes the importance of zoning in land use regulation, prior studies have either been geographically restricted or relied on surveys of administrators to obtain information about zoning ordinances. This paper introduces a novel land use restrictiveness index that provides local-level estimates of the number of housing units allowed per acre under municipal zoning ordinances in census block groups. We demonstrate that zoning has a more pronounced effect on house prices in the upper end of the price distribution across different states, and we provide estimates of the price elasticity of restrictiveness by state and by percentile of state-level price distributions.
- R3 - Real Estate Markets, Spatial Production Analysis, and Firm Location
- R5 - Regional Government Analysis