The Economics of Style: Measuring the Price Effect of Neo‐Traditional Architecture in Housing

Vintage effects have received considerable attention from economists in the context of house prices. Although strongly related, the impact of architectural building styles on prices has not been studied yet. Using a cross‐sectional hedonic price analysis including building styles of recently developed homes in the Netherlands we find a significant price premium for housing with neo‐traditional architecture. Extensive intervention by local authorities on the supply side of the housing market seems the most probable explanation of this effect. The decreasing price premium over time reflects the impact of supply restrictions on price, but also indicates that style does matter.     

Amenity‐Based Housing Affordability Indexes

The recent slump notwithstanding, substantial increases in house prices in many parts of the United States have served to highlight housing affordability for moderate‐income households, especially in high‐cost, supply‐constrained coastal cities such as Boston. In this article, we develop a new measure of area affordability that characterizes the supply of housing that is affordable to different households in different locations of a metropolitan region. Key to our approach is the explicit recognition that the price/rent of a dwelling is affected by its location. Hence, we develop an affordability methodology that accounts for job accessibility, school quality and safety. This allows us to produce a menu of town‐level indexes of adjusted housing affordability. The adjustments are based on obtaining implicit prices of these amenities from a hedonic price equation. We thus use data from a wide variety of sources to rank 141 towns in the greater Boston metropolitan area based on their adjusted affordability. Taking households earning 80% of area median income as an example, we find that consideration of town‐level amenities leads to major changes relative to a typical assessment of affordability.     

成都市金沙遗址博物馆对周边住宅价格影响分析

通过分析成都市金沙遗址博物馆周边一定区域内住宅到博物馆距离与住宅价格之间的关系,建立Hedonic模型,进一步研究影响城市住宅价格因素中旅游景区这一特征对住宅价格的影响。研究结果分为1)在影响住宅价格的因素中,显著性较强的是周边市政设施、物业费、建筑装修程度和到金沙遗址博物馆距离;2)成都市金沙遗址博物馆对城市住宅价格的影响可以用半对数模型表达式表示。进而得出结论:1)影响城市住宅价格因素中旅游景区特征对周边住宅价格的提升具有正作用;2)运用Hedonic模型可以有效地将旅游景区特征对住宅价格的影响作用进行量化;3)基于旅游景区的正向作用,国家应充分重视旅游房地产业。     

On Choosing Among House Price Index Methodologies

This paper compares housing price indices estimated using three models with several sets of property transaction data. The commonly used hedonic price model suffers from potential specification bias and inefficiency, while the weighted repeat-sales model presents potentially more serious bias and inefficiency problems. A hybrid model combining hedonic and repeat-sales equations avoids most of these sources of bias and inefficiency. This paper evaluates the performance of each type of model using a particularly rich local housing market database. The results, though ambiguous, appear to confirm the problems with the repeat sales model but suggest that systematic differences between repeat-transacting and single-transacting properties lead to bias in the hedonic and hybrid models as well.     

Estimating Bargaining Effects in Hedonic Models: Evidence from the Housing Market

Bargaining is common in markets for heterogeneous goods and differences in bargaining power between buyer and seller affect the negotiated transaction price. Previous research has found systematic evidence in the housing markets that weak buyers pay higher prices and weak sellers receive lower prices for their homes. Earlier work has modeled the bargaining effect as a parallel shift in the hedonic function, implicitly assuming that attribute shadow prices were unaffected by the bargaining process. In this paper, we use a sample of home sales where the seller's bargaining power is weakened by the fact that the home is vacant at the time of sale to test whether the effect of bargaining is best captured by a shift in the hedonic constant or whether the attribute shadow prices vary as well. The question is significant for property valuation where estimation of the marginal value of an attribute is commonly used to adjust comparable sales data. We find strong confirmation that bargaining power influences the negotiated price. We also find evidence that bargaining power alters attribute prices, although we do not find a consistent pattern across markets.     

To Sell or Not to Sell: Measuring the Heat of the Housing Market

Combining list‐price, sale‐price and time‐on‐the‐market data, we estimate an index that summarizes housing market conditions and that has a direct economic interpretation. The index measures seller's bargaining power in a structural search model of home seller behavior. Structural estimation uncovers an analytical relationship between reduced form coefficients of hedonic and marketing‐time equations and structural parameters. Thus, the index can be estimated using individual‐level or aggregate data. Using housing transactions data from the Washington, D.C., area, we show that index trends coincide with the up and downturns in home appreciation rates and with popular perceptions about the “heat” of the market.     

Housing Attributes Associated with Capital Gain

Housing units are heterogeneous goods. Rates of change in housing prices are typically modelled as if they arise from factors unrelated to the housing unit itself. For example, housing price increases in the latter part of the 1970s and early 1980s are argued to have arisen primarily from demographic factors and the differential effects of inflation on the effective rate of taxation on income from corporate capital and on owner-occupied housing. Cross-sectional variation in price inflation is not addressed. Consumers who purchased housing units are not indifferent to their attributes. To the extent that expectations vary within regional housing markets as a consequence of variation in housing attributes, standard linear hedonic price regression may generate biased estimates of implicit prices. This paper identifies sufficient conditions for the estimates of implicit prices in linear hedonic price regressions to be unbiased and generate unbiased estimates of implied price changes. Finally, this paper identifies living space (house size) as a significant attribute related positively to the increase in individual housing prices in a regional market.     

Catch Animal Spirits in Auction: Evidence from New Zealand Property Market

Following the animal spirits theory proposed by Akerlof and Shiller, this article contributes to behavior economics by investigating the possibility of using auction sales data to capture evidence of irrational exuberance in the housing market. Using the monthly percentages of residential property auction sales for Auckland, Wellington and Christchurch regions in New Zealand from 2006 to 2015, and the exuberance testing method proposed by Phillips, Shi and Yu, we find that animal spirits have been developing in the Auckland housing market since 2013, but not in other regions. When compared to the results based on price‐to‐rent ratios, auction sales provide more meaningful results for identifying market‐wide irrational exuberance at an early stage. The causality test on price‐to‐rent ratios and auction sales volume shows that asset prices and animal spirits influence each other in the short run. In the long run, prices have significant effect on animal spirits, but not vice versa.     

On the Use of Spline Smoothing in Estimating Hedonic Housing Price Models: Empirical Evidence Using Hong Kong Data

Traditionally in estimating hedonic housing price functions, investigators use parametric models involving specific functional forms and a finite number of unknown parameters. Some investigators have questioned whether the underlying theory is capable of conveying sufficient information to enable a correct and successful specification of parametric models and have instead proposed the less restrictive semiparametric approach to the problem. In this paper, we illustrate how the technique of smoothing splines can be used to estimate hedonic housing price models. Smoothing splines are a powerful approach to the analysis of housing data as they are exceptionally flexible in their functional forms and provide a computationally tractable method even with a large number of explanatory variables. Our illustration takes the form of a rather limited, but very promising, application with Hong Kong data. In the forecasting comparison, the spline smoothing procedure outperforms the traditional parametric Box–Cox model in mean square error terms for out-of-sample predictions. Our results also suggest that the distortion caused by underfitting the model is smaller for spline smoothing than for the kernel and k-nearest-neighbor semiparametric procedures.     

Flooding and Liquidity on the Bayou: The Capitalization of Flood Risk into House Value and Ease‐of‐Sale

The existing literature focuses on how perceived flood risk affects house value. Search theory, however, implies that flood risks will be capitalized into both house price and liquidity. This article draws on search theory to develop an empirical approach for estimating flood risk capitalization into both price and selling time. The results show the mix of price and liquidity capitalization varies by level of flood risk as well as across housing market phases. Regardless of the specific capitalization pattern, the results illustrate that focusing solely on price without allowing for concomitant liquidity capitalization can yield estimates that understate the full impact of flood risk on house transactions.     

House Search Duration in Hot and Cold Residential Markets

This study analyzes the determinants of house search duration of consumption‐driven buyers and individual investors in different housing market environments. We use data from surveys of recent house‐buyers in “hot” and “cold” housing markets in the 2000s housing bubble in California characterized by rising and declining residential house prices, respectively. The average house price and the surveyed geographical area are the same for both periods. Expected house ownership horizon is shown to be an important determinant of the realized search duration in addition to commonly considered housing and buyer characteristics. We find a statistically significant positive effect of it on the time until purchase in both housing price environments for consumption‐driven buyers. We also find that consumption‐driven house purchases were highly pronounced in coastal areas in the hot market and inland areas in the cold market. In contrast, long‐horizon investment activity leads that of consumption activity in those areas. Short‐horizon investors, on the other hand, concentrated their house search activity in inland areas in both housing market environments.     

Do House Price Levels Anticipate Subsequent Price Changes within Metropolitan Areas?

This research examines the relationship between hedonically controlled housing price levels and subsequent changes in those prices across locations within MSAs. Are areas with a high price relative to an “imputed rent” paying for higher appreciation? In an efficient market (e.g., Gordon Growth Model), as fundamentals (impute rent) differ across locations and change over time, anticipation of these should generate a positive correlation between (residual) price levels and subsequent price changes. We undertake these tests in four different MSAs using a panel of repeat‐sale house price indices that have been scaled to price levels with the hedonic attributes of the house and ZIP code. In three markets we find that identical houses in higher priced ZIP codes subsequently appreciate faster. In one market we find that there is little statistical difference.     

Tax Limits and Housing Markets: Some Evidence at the State Level

Property tax limitations, as well as other tax and expenditure restrictions on state and local governments in the United States, date back to the late 19th century. A surge in property tax limitation legislation occurred in the late 1970s and early 1980s, and its effects on government revenue, school financing and educational quality have been studied extensively. However, there is surprisingly little literature on how property tax limits affect housing markets. For the first time, we examine the impacts of property tax limitations on housing growth, in addition to their impacts on housing prices. Using state‐level data over 23 years, we find that property tax limits increase housing prices (indexes) by approximately 2%. Property tax limits appear to have little impact on the growth in the housing stock, but education spending limits reduce the number of building permits by over 6%. Our indirect evidence suggests that the number of housing units may grow when property tax limits are accompanied by increases in other own‐source revenues to state government.     

Green Noise or Green Value? Measuring the Effects of Environmental Certification on Office Values

This study investigates the price effects of environmental certification on commercial real estate assets. It is argued that there are likely to be three main drivers of price differences between certified and noncertified buildings. These are additional occupier benefits, lower holding costs for investors and a lower risk premium. Drawing upon the CoStar database of U.S. commercial real estate assets, hedonic regression analysis is used to measure the effect of certification on both rent and price. The results suggest that, compared to buildings in the same submarkets, eco‐certified buildings have both a rental and sale price premium.     

Housing Price Indexes from the 1974–1983 SIMSA Annual Housing Surveys

This paper reports residential real estate price indexes computed from the Standard Metropolitan Statistical Area (SMSA) Annual Housing Survey (AHS) for the 1974 through 1983 period. During this ten-year period, the U.S. Bureau of the Census conducted detailed surveys of the housing stock in sixty metropolitan areas in a three to four year cycle. This information is used to compute tenure specific hedonic housing price indexes for: (1) the entire metropolitan housing market; (2) separately for properties located in the central city and in the suburbs (whenever central city locations are identified); and (3) for three points in the dwelling quality distribution-for substandard housing (using the definition employed by the U.S. Department of Housing and Urban Development), for new housing (housing less than three years old and not substandard), and for existing standard quality housing (everything else). In addition, the hedonic prices reported here are adjusted for the finite sample bias introduced when taking the exponential of a lognormally distributed random variable.     

The Urban Homeowner's Residential Location Decision in an Asset-Pricing Context

Homeowners determine the maximum site bid price for homeowner housing within a two-period expected-utility model. The bid price is a function of the expected cash flows to sites, the quantity of housing consumed and a relocation option. The bid price is derived in the general case as a function of the homeowner's portfolio risk, including the total risk to the site, and the market price of risk. The bid price is derived under a spatial measure as a function of distance from an arbitrary location. Specific results are obtained when the household experiences log-linear utility for housing and other goods. Use of the market price of risk simplifies analytical solutions to the bid price equation.     

Substitutability and Complementarity of Urban Amenities: External Effects of Built Heritage in Berlin

This article analyzes the impact of designated landmarks on condominium transaction prices in Berlin, Germany. We test for price differentials between listed and nonlisted properties and study their impact on surrounding property prices. The proximity to built heritage is captured by the distance to listed houses and heritage potentiality indicators. Impact is assessed by applying a hedonic model to microlevel data, and this process also addresses spatial dependency. While our findings suggest that designated landmarks do not sell at a premium or discount, landmarks are found to have positive external effects on surrounding property prices within a distance of approximately 600 m.     

An Empirical Examination of Traditional Neighborhood Development

This study analyzes the impact of the new urbanism on single-family home prices. Specifically, we explore the price differential that homebuyers pay for houses in new urbanist developments relative to houses in conventional suburban developments. Using data on over 5,000 single-family home sales from 1994 to 1997 in three different neighborhoods, hedonic regression results reveal that consumers pay more for homes in new urbanist communities than those in conventional suburban developments. Further analyses indicate that the price premium is not attributable to differences in improvement age and other housing characteristics.     

Housing Regulation,Externalities and Residential Property Prices

This article examines the effects of quantity restrictions on residential property prices in the presence of neighborhood externalities. A Brigham Young University policy limiting students’ location choices provides a natural experiment for studying the externality and quantity restriction effects on property values. A flexible hedonic model is used to control for nonstudent population spatial sorting by type. The estimates show significant positive quantity restriction and student agglomeration effects on student housing prices. There are also significant differences in the negative student externality across nonstudent neighborhoods, with the quantity restriction reinforcing (offsetting) the student price premium (discount) at the boundary.     

Urban Housing Markets Modelling: Short-Run Equilibrium Implications

This paper tests for the existence of short-run equilibrium in the urban housing market in Metropolitan Toronto. The alternative hypothesis is the housing market segmented with respect to locational and structural attributes. We found insignificant differences in attribute prices across hypothesized submarkets. This implies that an unstratified hedonic price regressions model, based on the assumption of short-run equilibrium, is equally efficient in the analysis of housing prices as a model based on a number of subsamples stratified along lines of segmentation.