Housing Market Dynamics
Friday, Jan. 5, 2024 8:00 AM - 10:00 AM (CST)
- Chair: Carlos Hurtado, University of Richmond
Search for Yield in Housing Markets
AbstractWe study how investors in single-family housing markets have changed after the 2009
Global Financial Crisis (GFC) and the consequences for the markets and the economy.
We document several new facts for small and medium-sized investors: (a) The investors
after the GFC choose locations with the potential to earn high rental yield (b) Most new
investors are less likely to sell the properties in the short-term in response to capital gains.
(c) Consistent with a buy-and-hold strategy, the new investors have stronger preferences
for safer locations.
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