This website uses cookies.

By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.

  1. Home
  2. ASSA Annual Meeting
  3. 2025
  4. Program
  5. International Real Estate Market
« Back to Results

International Real Estate Market

Paper Session

Saturday, Jan. 4, 2025 2:30 PM - 4:30 PM (PST)

San Francisco Marriott Marquis, Nob Hill B
Hosted By: American Real Estate and Urban Economics Association
  • Chair: Jing Wu, Tsinghua University

Spatial Misallocation in Housing Development Markets: Evidence from China

Yongheng Deng
,
University of Wisconsin-Madison
Yang Tang
,
Nanyang Technological University
Ping Wang
,
Washington University-St. Louis and Federal Reserve Bank of St. Louis
Jing Wu
,
Tsinghua University

Abstract

"We evaluate the extent of spatial misallocation in China's housing development markets and examine the consequences for the aggregate and spatial distribution of housing and land prices, net migration flows, and welfare. We document the pervasive spatial variations of housing and land market wedges, although larger cities are less distorted. Our dynamic spatial equilibrium framework features endogenous rural-urban migration to various cities of different tiers. Our counterfactual analysis using a calibrated model suggests that, in a wedgeless economy, housing prices could be much higher and rise faster but with less spatial dispersion. In contrast, land prices could grow moderately more with greater volatility over time and larger dispersion across cities. Overall, housing wedges play a dominant role in driving both prices and dispersions as a result of dynamic amplification in the process of rural-urban migration. While the presence of such wedges may slow down the housing boom in large cities, it is at the expense of urban welfare loss especially in larger cities facing larger wedges, thereby widening tier income gaps."

The Impact of Chemical Explosion on Land Market: Evidence from Tianjin Explosion in China

Xiaofang Dong
,
Xiamen University
Zenghe Huang
,
Xiamen University

Abstract

This study utilizes a difference-in-difference approach to analyze the impact of the Tianjin Explosion on land values across China. The findings indicate a significant reduction in land prices within a 3.5-kilometer radius of chemical industrial parks following the explosion, with a 26.1% decline within 180 days and a 19.1% decrease within 360 days, compared to areas located 3.5 to 6 kilometers away. These effects were particularly pronounced for land buyers lacking real estate development experience, especially in smaller eastern cities, chemical parks situated closer to the central business district, and regions with a history of higher instances of explosions. Moreover, higher media search activity after the event was associated with more substantial decreases in land prices, emphasizing the role of altered risk perceptions in influencing the impact of environmental accidents on land values.

Behavioral Lock-In: Housing Market Taxation with Reference Dependent Agents

Jagdish Tripathy
,
Bank of England
Tarun Ramadorai
,
Imperial College Business School
Cristian Badarinza
,
National University of Singapore
Juhana Siljander
,
Imperial College Business School

Abstract

We embed optimizing agents with reference-dependent and loss-averse preferences into a dynamic equilibrium search and matching model of the housing market with rich heterogeneity and realistic constraints. We estimate and evaluate the model using granular administrative data from the U.K. housing market. Behavioral frictions act as a nominal rigidity, increasing the distortions associated with transaction taxes, and generating a novel source of inefficiency for ongoing property taxes. At the aggregate level, a simple statistic, the prevalence of “paper losses” in the stock of properties, captures variation in prices and volumes across regions, and determines variation of policy impact across locations.

Bidder Beware: Intergenerational Wealth Transfers and Overpayment in Housing Markets

Jaap Bos
,
Maastricht University
Nils Kok
,
Maastricht University
Jonas Wogh
,
Maastricht University

Abstract

Using an unanticipated tax-exemption policy in the Dutch housing market, this paper studies how wealth shocks affect housing consumption. We find that buyers raise their bid for a home by an average of six cents for each euro of additional wealth. Single-family detached homes are most affected, suggesting that buyers use their increased wealth to purchase homes that better match their preferences. At the local market level, the policy increases prices due to a spillover effect, whereby home buyers who are not directly affected by the policy raise their bids in response to an influx of transfer recipients.

Discussant(s)
Kaiji Chen
,
Emory University
Yifan Chen
,
University of Hawaii-Manoa
Yang (Zoe) Yang
,
Chinese University of Hong Kong
Rongjie Zhang
,
Tsinghua University
JEL Classifications
  • R0 - General