Housing Price Dynamics
Paper Session
Saturday, Jan. 8, 2022 3:45 PM - 5:45 PM (EST)
- Chair: Siqi Zheng, Massachusetts Institute of Technology
Housing Market Segmentation
Abstract
This paper studies the micro-structure of housing markets. With housing transactions data on 188 U.S. cities from 2000 to 2015, this paper is the first to show that market structure has economically important impacts on within-city heterogeneity in the growth paths of sub-market price segments. I introduce a new concept of local price rank segmentation (LRS) and develop an assignment model with endogenous housing supply to explain that relative local ranking affects house prices. The market clearing process in the assignment model operates in a vertically ranked order and matches the joint distributions of households and houses, generating two countervailing forces where demand spills upwards and supply is being added from the top down. These two forces result in mismatch in demand and supply at some segments which causes general equilibrium spillovers to prices in other segments. I structurally estimate the spillovers, show they drive house price segmentation, and account for 8% of variation in prices on average. These findings provide new insights on within-market vertical spillovers across price ranks in local housing markets, and help us understand how targeted housing policies (e.g. low-income housing subsidies) could have spillover effects on other segments within the same local market.When and How Do School Rezoning and New Schools Affect Property Values? The Impact of Redistricting in Fayette County, KY
Abstract
In the past fifty years, a voluminous literature estimating the value of schools through capitalization in home prices has emerged. Prior research has identified capitalized value using various approaches including boundary discontinuities. Our findings from redistricting in the Fayette County school district show that prices for homes redistricted from a lower-performing school into the proposed school catchment area (zones) increase by six percent. For houses in higher-performing school zones redistricted to the proposed new school zone, there is a smaller increase in value. Houses redistricted from higher-performing schools to lower-performing schools decrease in value by three to five percent. However, many of the redistricted properties see little or no significant change, suggesting that only extreme changes in school quality are capitalized. Critical to properly estimating the effect of redistricting is to account for when information on rezoning is available. We treat the information in three stage: announcement, approval and implementation of zoning plan and find that changes in property values in redistricted areas occurs well before implementation of the redistricting. As we show, failure to account for capitalization occurring before implementation will attenuate and even change the sign of capitalization.The Housing Phillips Curve
Abstract
"Using a high-resolution housing transaction data set, we examine the relationship between price changes and the unsold rate in the Norwegian housing market within a Phillips curve framework. We find that price changes and the unsold rate are associated, but our results indicate a reversed causality, from price changes to the unsold rate. We interpret our findings in a framework based on micro-foundations in which households decide on the sequence of buying and selling, i.e. whether to hold two or zero houses in the transition period. Data on individual sellers and buyers support the hypothesis that the propensity to hold two houses is pro-cyclical."Discussant(s)
Maggie Hu
,
City University of Hong Kong
Devin Bunten
,
Massachusetts Institute of Technology
Somerville Tsur
,
University of British Columbia
Jeffrey Zabel
,
Tufts University
JEL Classifications
- R3 - Real Estate Markets, Spatial Production Analysis, and Firm Location