Price dynamics in public and private housing markets in Singapore

In down-payment constrained housing consumption models, increases in house prices could trigger household mobility decisions in housing markets. This study empirically tests house price dynamics associated with the mobility of households in the public resale and private housing markets in Singapore. The results show that stochastic permanent breaks were found in the public housing resale prices and private housing prices. The relative prices drift apart occasionally, but mean-revert to a long-run fundamental equilibrium. Error correction mechanisms and lagged public housing prices were also found to have significant explanatory effects for price changes in the private housing markets. The results support the hypothesis that household mobility creates co-movements of prices in public and private housing submarkets in the long run.     

The Limits of Homeownership: Racial Capitalism,Black Wealth,and the Appreciation Gap in Atlanta

In the wake of the 2007–08 housing crash, the Black–white wealth gap reached a staggering 20 to 1. Since then, a growing chorus of influential voices has proposed measures to increase the Black homeownership rate as a means to narrow the gap. Others, however, have argued that the uneven racial geography of home price appreciation necessarily restricts the degree to which Black households, in the aggregate, can build wealth via homeownership. We aim to contribute to these debates by theorizing a racial appreciation gap as a central feature of urban housing markets under racial capitalism, and analyzing how neighborhood racial and income characteristics have structured home price appreciation from before the height of the housing boom (2000–03) to its post-crisis recovery (2014–16). Focusing on the two counties that encompass Atlanta, Georgia, USA—an area famous for Black prosperity—we find that a neighborhood's racial composition has a more salient impact on home price change than its income. Results indicate that when a place is marked as Black, this may itself inhibit home price appreciation, suggesting that an enduring racial appreciation gap may limit the potential for Black homeownership to substantively narrow the racial wealth gap.     

Racial discrimination in the Boston housing market

Recent studies suggest that price differentials between what whites and blacks pay for housing are largely a function of changes in supply and demand in the two submarkets. These studies, however, estimate models that assume a unified housing market. As a result, imputed prices of housing attributes cannot vary with location, and the analyses obscure important racial price differentials. Based on a more realistic and complex housing market theory, the model described in this paper indicates that housing prices are substantially higher in the ghetto and transition areas than in white areas, and that within the same area blacks must pay more than whites for equivalent housing.     

Wages and prices: Are workers fully compensated for cost of living differences?

This paper investigates the equilibrium relationship between wages and prices across labor markets. Of central interest is the extent to which workers receive higher wages to compensate for differences in the cost of living. According to the spatial equilibrium hypothesis, the utility of homogenous workers should be equal across labor markets. This implies that controlling for amenity differences across areas, the elasticity between wages and the general price level across areas should equal one, at least under certain conditions. I test this hypothesis and find that the predicted relationship holds when housing prices are measured by rents and the general price level is instrumented to account for measurement error. When housing prices are measured by housing values, however, the wage-price elasticity is significantly less than one, even using instrumental variables. Rents reflect the price paid for housing per unit of time and are arguably the superior measure. Thus, findings in this essay provide support for the full compensation hypothesis. These findings also have important implications for researchers estimating the implicit prices of amenities or ranking the quality of life across areas.     

Empirical evidence on the reaction speeds of housing prices and sales to demand shocks

This article studies the co-movement and dynamics between price movements and transactions in the housing market using data for the period 1988–2008 from Finland. While the previous related literature examines the reactions of sales and prices to an interest rate shock only, this study investigates the responses to income and debt shocks as well. The empirical estimations show that the response of prices to demand shocks is substantially slower than that of sales. The estimated reactions of sales substantially differ from those reported in the earlier literature. The reaction patterns can create the kind of strong positive co-movement between price movements and sales volume and the kind of negative correlation between price level and sales that have been found in several housing markets.     

Segmentation in urban housing markets

This study tests the hypothesis that urban housing markets are segmented in the sense of significantly different prices per unit of housing services existing contemporaneously in spatially or structurally defined submarkets. Using an unusually rich data set for single-family, suburban Boston homes, significant differences in the prices of individual housing attributes are found; but these differences result in negligible differences in the overall price per unit of services. A main conclusion is that the market is working fairly efficiently to eliminate price premiums and discounts, at least in the portion of the market analyzed.     

House price convergence in euro zone and non-euro zone countries

This study investigates whether single currency use increased house price convergence among various countries. First, the panel unit root test results indicate that the house prices in euro zone countries were more correlated than the house prices in non-euro zone countries. Second, the house prices in various European countries converged towards the house prices in Germany, which uses the single currency, rather than towards those in the United Kingdom, indicating that single currency use increased the influence of the German housing market on other markets. Finally, the log t regression model, a new convergence test, was employed and determined that the house prices in various European countries were not converging before 1992 but began to do so after that year. After the euro was implemented as an official currency, the house prices in various countries converged towards a consistent level. On the basis of the relative transition paths, this study determines that the differences among housing markets in various countries have continuously decreased since 1992. The empirical results indicate that the law of one price is applicable to tradable goods and that single currency use can integrate housing markets, which include non-tradable goods.     

List price and sales prices of residential properties during booms and busts

This paper investigates the relationship between the list and sale price of residential properties over the housing cycle. In down or normal markets the list price generally exceeds the sales price; however, when the housing market is strong, homes sell for more than their list price. This observation is not consistent with the assumptions made in the standard model of home sellers’ search behavior. We consider alternative models. In one, sellers set list prices based on their expectations of future changes in sales prices and the arrival rate of buyers; however, demand shocks occur. This model partially explains our data from the Belfast, U.K. housing market, but it fails to predict the list to sales price ratio during a sustained housing boom. We next describe a model where sellers’ endogenously select their search mechanism depending on the strength of the housing market. We find support for the conjecture that sellers switch to an auction-like model during housing booms. There also is evidence that during a downturn in the market, sellers’ list prices are sticky.     

The price responsiveness of housing supply in OECD countries

The responsiveness of housing supply to changes in prices bears important implications for the evolution of housing prices and the speed of adjustment of housing markets. Based on a stock-flow model of the housing market estimated within an error correction framework, this paper estimates the long-run price elasticity of new housing supply in 21 OECD countries. Estimates suggest that the responsiveness of housing supply to price changes varies substantially across countries. It is relatively more flexible in North America and some Nordic countries, while it is more rigid in continental European countries and in the United Kingdom. The responsiveness of housing supply depends not only on national geographical and urban characteristics but also on policies, such as land use and planning regulations.     

我国四大城市住宅价格与租金的关系研究

近20年,我国城市住宅价格经历了大幅下跌与上涨,而同期租金逐年下降,房价与租金之间的关系令人关注。本文利用1993年第二季度至2010年第一季度的数据进行实证分析,结果表明北京、上海、广州和深圳的租金指数和房价指数之间不存在协整关系,说明住宅市场价格与租金不存在长期均衡关系,房价严重脱离了租金这一基本面的影响,不再遵循现值理论模型所揭示的两者之间的运行趋势,表明房价泡沫在长期积聚。为了预防市场泡沫破灭对经济体造成的严重冲击,政府应该严格监察与调控房地产市场。     

人文资本特征、居民支付意愿与住宅价格

在构建人文资本与住宅意愿支付价格关系模型的基础上,运用2006年天津市有关数据,研究了人文资本特征对住宅价格的影响,并对人文资本特征溢价值进行了测算。对天津市的实证分析表明,人文资本密度指标中,只有居民素质、物业服务质量、小区周边体育场的距离对住宅总价有一定的影响,但并不显著。这说明人们对人文资本特征的偏好非常弱,天津市居民的住宅需求还处于基本需求阶段,尚未大规模进入改善需求阶段。以上结论对正确认识消费者偏好、公共投资效应、城市规划状况及住宅价格的合理性,具有重要的参考价值。     

Price Discrimination in Input Markets: Downstream Entry and Efficiency

The extant theory on price discrimination in input markets takes the structure of the downstream industry as exogenously given. This paper endogenizes the structure of the downstream industry and examines the effects of permitting third‐degree price discrimination on market structure and welfare. We identify situations where permitting price discrimination leads to either higher or lower wholesale prices for all downstream firms. These findings are driven by upstream profits being discontinuous due to costly entry. Moreover, permitting price discrimination fosters entry which often improves welfare. Nevertheless, entry can also reduce welfare because it may lead to a severe inefficiency in production.     

The asymmetric effect of crude oil prices on stock prices in major international financial markets

The aim of this paper is to explore the potential asymmetric impacts of positive and negative shocks in crude oil prices on stock prices in six major international financial markets which include China, Hong Kong, America, Japan, Britain, and Germany. We test for these asymmetric effects on 8 major international financial markets indices over the 2007M01–2020M03 periods. Our independent measures include the prices of Brent crude oil futures and West Texas Intermediate (WTI) futures. We use the nonlinear ARDL (NARDL) model proposed by Shin et al. (2014), which can capture both short- and long-run nonlinearities through positive and negative partial sum decompositions of the explanatory variables. This research finds that positive and negative fluctuations of oil price have asymmetric effects on stock price index in four financial markets, but the performance of the asymmetry is different. Specifically, the impacts of volatility in oil prices on two indices of Chinese stock prices are different, and the asymmetric effects of oil price volatility on stock price indices in China and other financial markets are significantly different.     

The role of the list price in housing markets: Theory and an econometric model

Houses are routinely sold at prices below, but rarely sold at prices above, their list prices. List prices appear to be price ceilings that preclude the possibility of sales at higher prices. This paper presents a theory of sellers' behaviour that explains why there are list prices in housing markets and why list prices are distinct from sellers' reservation prices. The theory forms the basis of an econometric model that has been estimated using data from the Baltimore, MD, area. The estimated model predicts sale and reservation prices conditional on list prices. The predictions of sale prices are considerably more accurate than those obtained from a standard hedonic price regression. The estimated model also explains why sellers may not be willing to reduce their list prices even after their houses have remained unsold for long periods of time.     

Monetary policy implications of housing shift-contagion across regional markets

This paper extends the shift-contagion concept to housing price returns in order to examine co-movements between pairs of regional housing markets in the US. It associates nonlinearities of housing prices with the monetary policy criteria at disaggregate levels. The framework with Markov-switching volatility in Gravelle et al. (Journal of International Economics 68:409–423, 2006) is utilized to investigate housing contagion phenomena which are defined as the switches in the structural transmission of common shocks across regional housing markets. The empirical results suggest that interactions between regional and nationwide housing markets switch across low-volatility and high-volatility regimes of common shocks for the Northeast and the West whose housing price returns are nonlinear. In addition, there is the significantly time-varying interdependence between the West and each of the other three regional housing markets. The estimated indicator of the monetary policy effectiveness implies that monetary policies can be effective in the Northeast and the West because they are more closely linked with other regional housing markets in volatile phases which are subject to housing crises. Noticeably, the broken interrelationships between regional housing markets and real economies in the 2001 recession imply high vulnerability to housing bubbles for regional markets, while short-term monetary policies can be effective in stabilizing the housing market turmoil around 2007.     

Do Teaser-Rate Adjustable-Rate Mortgages Make Owner-Occupied Housing More Affordable?

In this paper, we estimate the structural parameters of an aggregate housing demand curve and the relationship between ARM teaser rates and house prices using a simultaneous-equation Tobit model. The data come primarily from the Federal Housing Finance Board monthly interest rate survey in May of 1987-1989. The empirical results suggest that teaser ARMs produce significant price distortions in local housing markets. These price distortions ameliorate housing affordability for teaser ARM borrowers and worsen affordability problems for all other homebuyers.     

The down-payment constraint and UK housing market: Does the theory fit the facts?

This paper considers empirical implications of the down-payment constraint for the UK housing market. It shows that, at the aggregate-level, models of the housing market with this constraint are consistent with a number of stylized facts. The paper then exploits variation across local housing markets and considers how leverage affects the response of house price inflation to shocks. The evidence, based on data for 147 district-level housing markets for the period 1993–2002, suggests that a large incidence of households with high leverage (loan-to-value ratios) raises the sensitivity of house prices to a shock. This is also consistent with the down-payment constraint model.     

A re-examination of housing bubbles: Evidence from European countries

This study uses data from six Eurozone countries and the United Kingdom between 1980Q1 and 2018Q4 to examine whether these countries had housing bubbles during the observed period. Whereas typical studies make strictly limited assumptions regarding interest rates, we make an unconventional argument for the necessity of testing the integration relationship between the price–rent ratio and the interest rate reciprocal to determine the existence of housing bubbles. To verify this study’s proposition, two housing bubble indicators were adopted to dynamically examine periods of housing bubbles in European countries by using a series of individual countries and panel data from Eurozone countries. According to the empirical results for individual countries, although the price–rent ratio indicates the occurrence of housing booms in the targeted countries, the evidence for housing bubbles is unclear. The dynamic bubble indicator revealed that housing bubbles occurred in France and Ireland within a short period in 1993Q3 and 2000Q2, respectively. Spain experienced two short-term housing bubbles in 1990Q1 and 2015Q1. The short-term bubbles signify that the housing markets were efficient. Once the price–rent ratio failed to converge toward the nominal interest rate, market traders’ rational behavior can immediately correct the short-term market divergence. The panel data of the Eurozone countries also reveals that simply using the price–rent ratio for examination may underestimate the correction of the housing markets. In conclusion, the results of this study demonstrate the importance of the interest rate in controlling the housing market.     

What is the role of the asking price for a house?

This paper considers the role of the asking price in housing transactions both theoretically and empirically. Significant fractions of housing transactions involve sales prices that are either below or above asking price, which might suggest that asking price has limited relevance. However, many housing transactions involve a sales price exactly equal to asking price (a fact that has previously drawn little notice), strongly suggesting that asking price does matter. The paper develops a model where asking price is neither a binding commitment nor a ceiling, yet still directs buyer search and impacts sales price. Using novel survey data, the paper provides empirical evidence consistent with asking price playing a directing role in buyer search. Consistent with theory, this effect is stronger for more atypical houses and in bust markets.     

The spatial impact of employment centres on housing markets

The spatial impact of employment centres on housing markets. Spatial Economic Analysis. Local economic growth tends to affect neighbourhood house prices unevenly. It has been observed that prime locations experience price hikes far in excess of the surrounding local area. Yet, this phenomenon is not well captured by existing economic models. This research provides a model of spatial and temporal interactions between housing and employment markets. The results show that rapid growth of employment centres increases house prices in neighbouring locations even after adjusting for fundamentals. It is concluded that spatial clustering of companies creates an option value for existing and potential employees that goes beyond ease of access for commuting purposes.