Pricing used books on Amazon.com: a spatial approach to price dispersion

This paper estimates a spatial autoregressive (SAR) model of price dispersion using publicly available internet bookselling data. It uses a semiparametric adaptive estimator that does not require the usual Gaussian assumption of maximum likelihood (ML) estimators. The results suggest that both price competition and seller heterogeneity are key drivers of the observed price dispersion. The paper finds that sellers with large sales volume, newly established sellers and US mainland states-based sellers tend to price lower. The identified significant spatial interaction is evidence of spatial price competition. Controlling for everything else, a seller asks a lower price when large sellers charge relatively high prices, which is also evidence of price-based selling and undercutting.     

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.     

A multivariate unobserved component analysis of US housing market

This study explores price dynamics and price relationships in the US housing market with a focus on four regions: Northeast, Midwest, South, and West. It applies a multivariate state-space model to identify the common trends and common cycles in US regional markets. The study finds that the principal source of secular price variability in the Northeast and West markets is due to two common stochastic trends, while a large share of transitional price variability in the Northeast, West and Midwest originates from three common stochastic cycles. The study estimates the relationships between the common unobserved components and economic variables and finds that unemployment, federal funds rate, corporate default risk, economic expansion, unanticipated inflation in the construction market are significant underlying economic phenomena that impact the evolution of the common movements in both the short run and the long run housing dynamics. Authorship is equally shared between the authors.     

Buyer information and the hedonic: The impact of a seller disclosure on the implicit price for airport noise

Revealed preference methods like the hedonic model generally assume economic agents have access to publicly available information and use it effectively. In the housing market, the recent proliferation of seller disclosure laws suggests that policymakers perceive buyers to be less than “fully informed,” presumably since they face higher information acquisition costs than sellers. The introduction of an airport noise disclosure in the residential housing market surrounding the Raleigh–Durham International Airport is used as a quasi-random experiment to analyze the impact of this type of information asymmetry between buyers and sellers on housing prices. The results from a regression analysis that controls for potential spatial and temporal confounders, suggest that the airport noise disclosure reduced the value of houses most heavily impacted by airport noise by 2.9 percent. This represents approximately a 37 percentage point increase in the implicit price of airport noise. The results provide evidence that publicly available information, such as that available for airport noise, may not be adequately considered by all buyers. They also suggest that the information environment should be carefully considered when using housing data and the hedonic model to value urban amenities and disamenities.     

Revealed preference for relative status: Evidence from the housing market

This paper investigates the value individuals place on their relative housing consumption as compared to absolute housing consumption. Using observed housing sales from three Ohio MSAs in 2000, a spatial Durbin hedonic price model provides total marginal willingness-to-pay estimates for both characteristics of housing units and those of its neighbors. Using this revealed-preference approach, we find evidence suggesting individuals do value relative house size, but the absolute effect dominates. For instance, the estimates indicate that if all homes in Columbus were to increase in size by 100 square feet, the net effect of impacts on absolute and relative consumption would be to increase house prices by $605 on average. This stands in contrast to the stated preference literature, which frequently find individuals to be willing to forgo absolute well-being in exchange for relative status gains.     

中国房地产交易真的是卖方市场吗？——基于双边随机边界模型的实证研究

科学测算房地产交易市场买卖双方议价能力对市场价格形成的影响作用，是当前政府制定“因地施策”宏观调控机制的重要前提。采用双边随机边界模型，考察房地产交易环节中买卖双方议价能力的差异,结果表明：（1）买卖双方讨价还价因素对商品房销售价格的最终形成存在显著影响；（2）从全国平均水平看，对于整体市场以及住宅、写字楼和商铺等细分市场，卖房者议价能力在双方讨价还价过程中占主导地位，但买方议价能力的影响作用也不容忽视；（3）从一线、新一线、二线和三线城市角度看，除了一线城市商铺市场以及三线城市总体城市、住宅市场和写字楼市场外，其他均处于卖方市场阶段。     

Divergence in Reservation Prices and Its Impact on Housing Market Liquidity: A Theoretical Analysis

In this paper, we build a two-period English auction model to study the relative movements between buyers’ and sellers’ reservation prices in the housing market. We show that changes in sellers’ reservation prices are jointly determined by changes in buyers’ reservation prices, probability of buyers offering a high or low price, and the arrival rate of buyers. When the divergence between the buyers’ and sellers’ reservation prices widens, the probability of sale increases in the upward market and decreases in the downward market, contributing to the increases or decreases in market liquidity.     

An Application of an Integrated Transport Network– Multiregional CGE Model: a Framework for the Economic Analysis of Highway Projects

This paper develops a framework for the economic analysis of highway projects that is then used to estimate the dynamic economic effects of a highway project on the economic growth and the regional disparity in Korea. The framework is composed of a transport model and a multiregional Computable General Equilibrium (CGE) model. The transport model measures a change in interregional shortest distances and the accessibility due to the highway project. The CGE model estimates the spatial economic effects of the project on GDP, the price, exports, and the regional distribution of wages and population. The simulation allows policy makers to determine which highway development deserves the priority for investment, based on consideration of economic growth and regional economic equity in the long run. The simulation found that all the highway projects have positive effects on GDP and export growth as well as regional equity in terms of wage and population.     

House prices and consumer welfare

We develop a new approach to measuring changes in consumer welfare due to changes in the price of owner-occupied housing. In our approach, an agent's welfare adjustment is defined as the transfer required to keep expected discounted utility constant given a change in current house prices. We demonstrate that, up to a first-order approximation, there is no aggregate change in welfare due to price increases in the existing housing stock. This follows from a simple market clearing condition where capital gains experienced by sellers are exactly offset by welfare losses to buyers. We show that this result holds (approximately) even in a model that accounts for changes in consumption and investment plans prompted by current house price changes. There can, however, be changes in welfare due to additions to the stock of housing, or to changes in the price of renovating and upgrading the existing stock of housing. For the United States, we estimate the welfare cost of house price appreciation to be an average of $127 per household per year over the 1984–1998 period.     

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.     

我国新建住宅长期供给价格弹性估算——基于35个大中城市的实证研究

大多数住宅模型和政策分析,都直接或间接依赖于住宅供给价格弹性的估计值：为了应对市场需求冲击,是多供给住房还是提高住宅价格？基于Mayo（1981）构建的模型,估算了我国35个主要大中型城市的新建住宅供给价格弹性。根据流量模型,2000-2007年我国的新建住宅价格弹性系数在4-11之间,2008到2013年的价格弹性在5-13之间。而存量调整模型得到了截然不同的估算结果：2008-2013年我国的新建住宅供给价格弹性在1-6之间,更精确的估算出了我国新建住宅供给市场的价格弹性。     

Measuring the diffusion of housing prices across space and over time: Replication and further evidence

Brady (Journal of Applied Econometrics, 2011, 26(2), 213–231) studies how fast and how long a change in housing prices in one region affects its neighbors by estimating the impulse response functions using a spatial autoregressive model (SAR). This paper replicates Brady's empirical results, but reports different SAR test statistics. Additional robustness checks are conducted by analyzing three different housing price indexes covering a more extensive period. Analysis shows that the model specifications and model estimates vary with the housing price indexes.     

The effect of economic policy uncertainty on China’s housing market

This study examines the relationship between economic policy uncertainty (EPU) and housing price at the macro-level in China as a developing country. The empirical evidence indicates that EPU has a leading effect on China’s housing market. In general, the housing market is prosperous when economic policy is stable and there is a positive relationship between housing price variation and EPU, which means housing market risk grows under unstable economic policies in this developing economy. Moreover, economic policy variation affects low-amplitude changes in housing prices. A variation of policy uncertainty enhances the risk premium of the housing market. By contrast, the level of EPU influences high-amplitude changes in housing prices, which reflects the trend of EPU dominating China's housing market.     

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.     

城市经济对住宅价格影响研究--以35个大中城市为例

住宅市场具有很强的地域特性,不同城市由于经济发展等因素的影响,造成住宅价格具有较大的差异。将城市经济分为城市经济规模、城市产业结构和城市经济效率,以35个大中城市为例,运用静态面板数据模型研究城市经济对住宅价格的影响。结果表明,城市经济对住宅价格具有很强的正相关作用,尤其是城市经济规模和城市产业结构。城市经济规模方面,GDP、地方财政支出对住宅价格具有显著的正面影响;城市产业结构方面,第三产业增加值占GDP比重越高,住宅价格越高;城市经济效率方面,人均地方财政收入和第二、三产业增加值与建成区面积之比都对住宅价格具有显著的正相关性。因此,城市在区域经济一体化的带动下将追求创新高效率的发展,同时优化城市空间结构和产业结构,有助于住宅市场的健康发展。     

Raising the bar (11)

This editorial summarizes the papers published in issue 14(2) so as to raise the bar in applied spatial economic research and highlight new trends. The first paper deals with past and current challenges for regional science research. The second paper investigates whether people living in deprived neighbourhoods have less chance of succeeding in a job application. The third paper finds evidence that real estate firms can avoid price competition when market shares of their allies increase in the vicinity. The fourth paper is methodological: it considers a spatial autoregressive (SAR) model with heterogeneous coefficients and extensively analyzes the impact of this extension on the direct and indirect effects estimates. The fifth paper proposes an innovative method to estimate the elements of the spatial weight matrix in a spatial econometric model. The final paper is econometric–theoretical: it proposes a new generalized method of moments (GMM) estimator of the coefficients of a SAR model if the error terms are heteroskedastic of an unknown form.     

On the cyclicity of regional house prices: New evidence for U.S. metropolitan statistical areas

This paper is mainly concerned with the analysis of regional house price cycles. We introduce a wavelet transform based metric to study the housing cycle synchronization across the largest U.S. MSAs with a focus on the recent housing bubble. We derive several conclusions: (i) We show that regional housing cycle dissimilarities are significantly and strongly connected to geography. (ii) After the burst of the recent housing bubble there was greater significant co-movement in shorter cycles for a short period of time. (iii) Coastal regions, which have a higher house price volatility compared to other MSAs are also those with a higher degree of house supply regulation. (iv) A mortgage-rate reduction decrease the dissimilarity between the MSAs and the national housing cycle before the end of 2006 at higher frequencies. Hence, monetary policy is partially effective, whereas effectiveness depends on time, frequency, and the considered MSA.     

Fundamentals, Feedback Trading, and Housing Market Speculation: Evidence from California

Housing market researchers have long suspected that the market for single family homes is not efficient. The apparent predictability in housing prices, at least in the short run, leaves open the possibility of speculative purchases in the housing market. The purpose of this paper is to investigate the relative influence of speculative and economic demand on median house price on the Santa Barbara South Coast. An empirical model is presented that allows for decomposition of house price appreciation into that driven by economic and demographic forces and that resulting from speculative demand. The decomposition reveals a speculative bubble in the housing market forming in late 1987 and collapsing in mid 1990.     

城市商品住宅价格水平影响因素研究

商品住宅价格问题是社会关注的焦点问题.以全国35个重点城市1999年-2005年数据为基础,研究城市住宅价格水平的影响因素.研究显示,代表城市经济发展水平和居民收入水平、单位面积土地投入、城市区位和城市环境等侧面的职工平均工资、单位面积固定资产投资、人均铺装道路面积、距海岸线的距离、通过城市的国道数量、建成区绿化覆盖率这6个因素是影响城市住宅价格水平的主要因素.可以预期,当一个城市的这些因素发生相对变化和绝对变化的时候,城市的住宅价格水平必然会发生相应的变化.阳光充足、水资源丰富、交通便捷的近海地区城市的商品住宅价格变动幅度会由于经济发展、人口增加、区住条件进一步优化、投入加大等各种条件的较大变化而高于其他城市.     

An Almost Ideal Cost of Living Index for Food in Spain Using a Microeconomic Approach and Censored Data

Abstract

A true cost of living (COL) index should compare the cost derived by two consumption levels and two price vectors maintaining the same utility in the two cases. Its application and empirical testing has been, generally, focalized on a temporal perspective. A spatial perspective it is also interesting for economic analysis because it allows for making comparisons of COLs across geographical units. This spatial approach, however, it is not so frequent in the literature. The aim of this paper is to calculate a spatial COL index for the regions of Spain. For this purpose, we use microdata from the 2010 Households Budget Survey (HBS, Encuesta de Presupuestos Familiares) provided by the Spanish Statistical Institute (INE, Instituto Nacional de Estadística). We will denominate this index spatial cost of living index (SCOL). We use a microeconomic approach that keeps the level of utility of households constant across space but allows for substitution among different baskets of goods. The results reveal large differences in COL across the Spanish regions. The estimates of the SCOL index allows for reconsidering regional comparisons in terms of average wages. Even when nominal monetary figures from official Regional Accounts show huge regional disparities, regional differences are largely moderated when the wage figures are corrected by our SCOL index.