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. Based on this index of housing returns from 2010 to 2022, I find that at the national level that Asian buyers earn higher returns than other groups. For California buyers and for Los Angeles buyers, Black people earn roughly the same average rate of return but face a higher standard deviation in returns than other groups.
{"title":"Racial and ethnic differences in the financial returns to home purchases","authors":"Matthew E. Kahn","doi":"10.1111/1540-6229.12475","DOIUrl":"https://doi.org/10.1111/1540-6229.12475","url":null,"abstract":"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. Based on this index of housing returns from 2010 to 2022, I find that at the national level that Asian buyers earn higher returns than other groups. For California buyers and for Los Angeles buyers, Black people earn roughly the same average rate of return but face a higher standard deviation in returns than other groups.","PeriodicalId":47731,"journal":{"name":"Real Estate Economics","volume":null,"pages":null},"PeriodicalIF":2.2,"publicationDate":"2024-01-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139609138","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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 indices (2010 definitions) at an annual frequency between 1989 and 2021, which we release alongside this article. Second, we use these indices to estimate city-level price indices that are robust to heterogeneous submarket appreciation and nonrandom sampling, two issues that confound classic approaches. Different index targets require alternative weighting schemes, and these formulations can result in index differences that can widen over time horizons. However, in some cases, sample-based indices are quite similar to more strictly defined index targets; for instance, in the early COVID-19 period, standard sample-based indices are actually quite similar to a unit-representative house price index for large cities.
{"title":"A flexible method of housing price index construction using repeat-sales aggregates","authors":"Justin Contat, William D. Larson","doi":"10.1111/1540-6229.12474","DOIUrl":"https://doi.org/10.1111/1540-6229.12474","url":null,"abstract":"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 indices (2010 definitions) at an annual frequency between 1989 and 2021, which we release alongside this article. Second, we use these indices to estimate city-level price indices that are robust to heterogeneous submarket appreciation and nonrandom sampling, two issues that confound classic approaches. Different index targets require alternative weighting schemes, and these formulations can result in index differences that can widen over time horizons. However, in some cases, sample-based indices are quite similar to more strictly defined index targets; for instance, in the early COVID-19 period, standard sample-based indices are actually quite similar to a unit-representative house price index for large cities.","PeriodicalId":47731,"journal":{"name":"Real Estate Economics","volume":null,"pages":null},"PeriodicalIF":2.2,"publicationDate":"2024-01-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139517269","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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. By merging granular spatial data from a complete housing inventory in the 2011 German Census with historical homeownership rates and housing damages during the Second World War as sources of exogenous variation in local homeownership, we provide empirical evidence that otherwise identical jurisdictions charge significantly lower property taxes when the share of homeowners in their population is higher. This result is invariant to local market conditions, which suggests tax salience is the key mechanism behind this effect. Moreover, we find positive spatial dependence on tax multipliers, indicative of property tax mimicking by local governments.
{"title":"Do local governments tax homeowner communities differently?","authors":"Roland Füss, Oliver Lerbs, Alois Weigand","doi":"10.1111/1540-6229.12469","DOIUrl":"https://doi.org/10.1111/1540-6229.12469","url":null,"abstract":"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. By merging granular spatial data from a complete housing inventory in the 2011 German Census with historical homeownership rates and housing damages during the Second World War as sources of exogenous variation in local homeownership, we provide empirical evidence that otherwise identical jurisdictions charge significantly lower property taxes when the share of homeowners in their population is higher. This result is invariant to local market conditions, which suggests tax salience is the key mechanism behind this effect. Moreover, we find positive spatial dependence on tax multipliers, indicative of property tax mimicking by local governments.","PeriodicalId":47731,"journal":{"name":"Real Estate Economics","volume":null,"pages":null},"PeriodicalIF":2.2,"publicationDate":"2024-01-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139412547","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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 stations, and educational establishments but less likely in higher income areas and Black neighborhoods, although parcels in Latino neighborhoods are more likely to contain ADUs. The assessed-value regressions show that ADU presence raises a parcel's assessed value and selling price by 7%–9%, while also accurately capturing the unusual rules for property assessments under California's Proposition 13.
{"title":"ADUs in Los Angeles: Where are they located and by how much do they raise property value?","authors":"Jan K. Brueckner, Sarah Thomaz","doi":"10.1111/1540-6229.12471","DOIUrl":"https://doi.org/10.1111/1540-6229.12471","url":null,"abstract":"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 stations, and educational establishments but less likely in higher income areas and Black neighborhoods, although parcels in Latino neighborhoods are more likely to contain ADUs. The assessed-value regressions show that ADU presence raises a parcel's assessed value and selling price by 7%–9%, while also accurately capturing the unusual rules for property assessments under California's Proposition 13.","PeriodicalId":47731,"journal":{"name":"Real Estate Economics","volume":null,"pages":null},"PeriodicalIF":2.2,"publicationDate":"2024-01-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139412522","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We study the effectiveness, consequences, and transmission mechanisms of the government's interventions for Hong Kong's residential housing market between 2009 and 2017. We use granular microlevel transaction data and adopt a regression discontinuity design to conduct the empirical analysis. We find that mortgage‐tightening measures effectively curbed the overheated market by reducing price and volume while specific submarkets occasionally experienced volatility. Tax‐driven measures effectively suppressed trading activity but triggered price volatilities across submarkets. Several rounds of measures had a spillover effect on subsidized public housing. Our findings have implications for policymakers seeking to review and revise property market intervention policies in Hong Kong and elsewhere.
{"title":"The effectiveness and consequences of the government's interventions for Hong Kong's residential housing markets","authors":"Yongheng Deng, Congyan Han, Teng Li, Yonglin Wang","doi":"10.1111/1540-6229.12472","DOIUrl":"https://doi.org/10.1111/1540-6229.12472","url":null,"abstract":"We study the effectiveness, consequences, and transmission mechanisms of the government's interventions for Hong Kong's residential housing market between 2009 and 2017. We use granular microlevel transaction data and adopt a regression discontinuity design to conduct the empirical analysis. We find that mortgage‐tightening measures effectively curbed the overheated market by reducing price and volume while specific submarkets occasionally experienced volatility. Tax‐driven measures effectively suppressed trading activity but triggered price volatilities across submarkets. Several rounds of measures had a spillover effect on subsidized public housing. Our findings have implications for policymakers seeking to review and revise property market intervention policies in Hong Kong and elsewhere.","PeriodicalId":47731,"journal":{"name":"Real Estate Economics","volume":null,"pages":null},"PeriodicalIF":2.2,"publicationDate":"2024-01-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139381901","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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 portfolio loans. The portfolio setting allows us to provide strong evidence that misreporting happens in the early stages of intermediation by lenders. The decreased occurrence of misreporting in sold loans subjected to more rigorous screening indicates the effectiveness of MBS issuers' screening, though its overall effect remains limited. Further, we show that the lender-MBS issuer affiliation also plays a role in misreporting.
{"title":"Misreporting of second liens in portfolio mortgages and privately securitized mortgages","authors":"Abdullah Yavas, Shuang Zhu","doi":"10.1111/1540-6229.12464","DOIUrl":"https://doi.org/10.1111/1540-6229.12464","url":null,"abstract":"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) <i>lower</i> misreporting rate than observably similar portfolio loans. The portfolio setting allows us to provide strong evidence that misreporting happens in the early stages of intermediation by lenders. The decreased occurrence of misreporting in sold loans subjected to more rigorous screening indicates the effectiveness of MBS issuers' screening, though its overall effect remains limited. Further, we show that the lender-MBS issuer affiliation also plays a role in misreporting.","PeriodicalId":47731,"journal":{"name":"Real Estate Economics","volume":null,"pages":null},"PeriodicalIF":2.2,"publicationDate":"2023-12-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138520904","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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 important expertise category is agents’ local market knowledge. We consistently find that the economically important determinant of transaction prices is the separation distances between the subject homes being traded and agents’ micromarkets where they have conducted recent transactions. The results further demonstrate that agents who have tighter market concentrations increase prices and vice versa for unfocused micromarkets. We find that agents’ expertise levels do not materially alter marketing durations.
{"title":"The impact of real estate agents’ expertise on house prices and TOM","authors":"Lu Fang, Darren K. Hayunga","doi":"10.1111/1540-6229.12466","DOIUrl":"https://doi.org/10.1111/1540-6229.12466","url":null,"abstract":"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 important expertise category is agents’ local market knowledge. We consistently find that the economically important determinant of transaction prices is the separation distances between the subject homes being traded and agents’ micromarkets where they have conducted recent transactions. The results further demonstrate that agents who have tighter market concentrations increase prices and vice versa for unfocused micromarkets. We find that agents’ expertise levels do not materially alter marketing durations.","PeriodicalId":47731,"journal":{"name":"Real Estate Economics","volume":null,"pages":null},"PeriodicalIF":2.2,"publicationDate":"2023-12-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138520903","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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 from policies prior to the announcement and subsequent introduction of the tax. Using a difference in differences methodology, we compare house price changes pre- and posttax between high and low foreign buyer concentration neighborhoods. We find that house prices decline by 6% in neighborhoods with above median concentrations of foreign buyers after the tax relative to prices in neighborhoods with below median concentrations of foreign buyers. The quantitative effects are also striking with overall foreign buyer share falling from 13.2% of single-family transactions in the 6 weeks prior to the announcement of the tax to 1.7% for the 3 months following the tax. The unique contribution of this article is our use of transaction-level data to explicitly identify the properties purchased by foreign buyers to create more accurate control and treatment groups than found in other analyses.
{"title":"Foreign buyer taxes and housing affordability","authors":"Andrey Pavlov, Tsur Somerville, Jake Wetzel","doi":"10.1111/1540-6229.12468","DOIUrl":"https://doi.org/10.1111/1540-6229.12468","url":null,"abstract":"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 from policies prior to the announcement and subsequent introduction of the tax. Using a difference in differences methodology, we compare house price changes pre- and posttax between high and low foreign buyer concentration neighborhoods. We find that house prices decline by 6% in neighborhoods with above median concentrations of foreign buyers after the tax relative to prices in neighborhoods with below median concentrations of foreign buyers. The quantitative effects are also striking with overall foreign buyer share falling from 13.2% of single-family transactions in the 6 weeks prior to the announcement of the tax to 1.7% for the 3 months following the tax. The unique contribution of this article is our use of transaction-level data to explicitly identify the properties purchased by foreign buyers to create more accurate control and treatment groups than found in other analyses.","PeriodicalId":47731,"journal":{"name":"Real Estate Economics","volume":null,"pages":null},"PeriodicalIF":2.2,"publicationDate":"2023-12-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138520902","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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. By segmenting into submarkets, I search for determinants of price seasonality. The evidence suggests that the December effect is linked to time-on-market for each unit and transaction volumes within each submarkets.
{"title":"House price seasonality, market activity, and the December discount","authors":"Erling Røed Larsen","doi":"10.1111/1540-6229.12463","DOIUrl":"https://doi.org/10.1111/1540-6229.12463","url":null,"abstract":"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. By segmenting into submarkets, I search for determinants of price seasonality. The evidence suggests that the December effect is linked to time-on-market for each unit and transaction volumes within each submarkets.","PeriodicalId":47731,"journal":{"name":"Real Estate Economics","volume":null,"pages":null},"PeriodicalIF":2.2,"publicationDate":"2023-11-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138520883","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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 income ratios, as an additional factor in the increase in coresidency since but not before 2000. We endogenize the marriage–childbearing decision with a Heckman selection model and attribute up to a quarter of the observed 9-percentage-point increase in the coresidence share between 2000 and 2021 to a decrease in housing affordability. We find a nonlinear relationship between affordability and coresidence with the relationship strongest in the least affordable metros where affordability constraints might be more binding. Overall, these results show changes in market-level housing affordability are associated with the increase in young adult coresidence over the first two decades of the 21st century.
{"title":"Why do young adults coreside with their parents?","authors":"Arthur Acolin, Desen Lin, Susan M. Wachter","doi":"10.1111/1540-6229.12467","DOIUrl":"https://doi.org/10.1111/1540-6229.12467","url":null,"abstract":"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 income ratios, as an additional factor in the increase in coresidency since but not before 2000. We endogenize the marriage–childbearing decision with a Heckman selection model and attribute up to a quarter of the observed 9-percentage-point increase in the coresidence share between 2000 and 2021 to a decrease in housing affordability. We find a nonlinear relationship between affordability and coresidence with the relationship strongest in the least affordable metros where affordability constraints might be more binding. Overall, these results show changes in market-level housing affordability are associated with the increase in young adult coresidence over the first two decades of the 21st century.","PeriodicalId":47731,"journal":{"name":"Real Estate Economics","volume":null,"pages":null},"PeriodicalIF":2.2,"publicationDate":"2023-11-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138520922","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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