Housing market and finance

Save this PDF as:
 WORD  PNG  TXT  JPG

Size: px
Start display at page:

Download "Housing market and finance"

Transcription

1 Housing market and finance

2 Q: What is a market? A: Let s play a game Motivation THE APPLE MARKET The class is divided at random into two groups: buyers and sellers

3 Rules: Buyers: Each buyer receives a card containing a number (keep it to yourself) This number is the maximum price he/she is willing to pay for one unit Buyers cannot buy a unit at a price exceeding this number (would be happy to buy at any price below this number) Better buy one than leaving wants go unsatisfied Surplus : Difference between willingness to buy and the actual price paid If a buyer wants to make a bid, please raise your hand and say Buyer XXXX: Bid your bid price Each succeeding bid price must exceed the previous ones until a transaction occurs.

4 Rules: Sellers: Each seller receives a card containing a number (keep it to yourself) This number is the minimum price he/she is willing to sell for one unit Sellers cannot sell a unit at a price below this number (would be happy to sell at any price above this number) Better sell one than leaving wants go unsatisfied Surplus : Difference between selling price and the reservation price If a seller wants to sell a unit, please raise your hand and say Seller XXXX: Ask your ask price Each succeeding ask price must be below the previous ones until a transaction occurs.

5 I am the auctioneer and will record the bid, ask, and transacted prices on the board. Each buyer and seller is allowed to make one transaction. The buyer and seller making the deal drop out of the market (no longer a legitimate participant). A new trading period begins whenever a transaction is concluded.

6 Price THE APPLE MARKET Number of apples

7 OUR HYPOTHETICAL MARKET OF APPLES Price Supply Equilibrium price BUT THE HOUSING MARKET IS *VERY* DIFFERENT FROM THIS HYPOTHETICAL MARKET! Demand Equilibrium quantity Quantity

8 Characteristics of the housing market Housing is not an identical product! Homogeneity vs. heterogeneity What is price measuring? Participants are not identical! Tenure choice The Demographic housing market events is a lot more complex than the demand-supply diagram shown earlier! Housing is not easily malleable and purchasing it requires a large outlay! Financing Neighbourhood characteristics / externality Housing market is not a closed market! Search and uncertainty Household mobility

9 OUR HYPOTHETICAL MARKET OF APPLES Price Supply Equilibrium price Demand Equilibrium quantity Quantity

10 Estimating the market price of housing To fix ideas: Consider owner-occupied housing

11 Problem 1: What is quantity here? Solution: Notion of housing services: Standardized units of services; flow of services provided by each dwelling unit Horizontal axis: units of services Vertical axis: rent per unit of services Problem 2: What is price? Solution: Imputed rent owners pay rent to themselves Rent = Price * interest rate Price = Rent / interest rate Problem 3: How to measure units of services? Solution: Instead of observing rent per unit, we observe total expenditure (quantity times price per unit) = value of the dwelling

12 OUR HYPOTHETICAL MARKET OF APPLES Price Supply Equilibrium price Demand Equilibrium quantity Quantity

13 OUR HYPOTHETICAL MARKET OF APPLES Price Supply Equilibrium price Demand Equilibrium quantity Quantity

14 Estimating the market price of housing (continued) To fix ideas: Consider owner-occupied housing Approaches to estimating the market price: A. Hedonic price index B. Repeat sales C. Variants of the above two

15 Estimating the market price of housing (continued) A. Hedonic index Assumptions 1. Housing provides a flow of housing services bundle of property rights and enjoyment 2. Can decompose price into price per unit of services by attributes Physical Environmental Neighbourhood 3. Can use transacted prices to predict prices of similar housing units

16 Estimating the market price of housing (continued) Hedonic index Data requirements 1. A database of recently transacted properties 2. Observe: Selling price # of bedrooms # bathrooms Square footage / lot size Furnished basement? # kitchens Access to park / amenities / pollutants Distance to the CBD

17 Estimating the market price of housing (continued) Hedonic index Sample data 1998 transacted properties in Markham, Ontario ~900 observations from MLS (district N11) See map

18 Sample transacted properties from Multiple Listing Services, Markham (1999)

19 Sample transacted properties from Multiple Listing Services, Markham (1999)

20 Estimating the market price of housing (continued) Hedonic index Sample data 1998 transacted properties in Markham, Ontario ~900 observations from MLS (district N11) See map Technique Statistical technique: Linear regression (log-log form) Results Interpretation See table

21 Hedonic pricing model, Markham (1999)

22 Estimating the market price of housing (continued) Hedonic index Sample data 1998 transacted properties in Markham, Ontario ~900 observations from MLS (district N11) See map Are similar dwelling units indeed comparable? Technique Statistical technique: Linear regression (log-log form) Results Interpretation See table

23 Estimating the market price of housing (continued) B. Repeat sales Assumptions 1. Concerns the regional house price index (aggregated at some geographic scale) 2. Changes in house prices of the SAME house would provide a quality-controlled index

24 Estimating the market price of housing (continued) B. Repeat sales Data requirements 1. A database of transacted properties over a long period of time Properties / stock of dwelling units in a region 2. Observe: Year of first transaction Year of second / subsequent transaction(s) Selling price of each transaction

25 Estimating the market price of housing (continued) B. Repeat sales Sample data all properties in Philadelphia, Pennsylvania See map and table

26 Sample repeat sales data from Philadelphia, Pennsylvania ( )

27 Sample repeat sales data from Philadelphia, Pennsylvania ( )

28 Sample repeat sales data from Philadelphia, Pennsylvania ( )

29 Sample repeat sales data from Philadelphia, Pennsylvania ( )

30 Estimating the market price of housing (continued) B. Repeat sales Technique Statistical technique Assign -1 to year of first transaction Assign 1 to year of second transaction Assign 0 to years with no transaction Regress change in selling prices (log) on years (-1,0,1) Results and Interpretation See table

31 Repeat Sales House Price Index of Philadelphia, Pennsylvania ( )

32 Repeat Sales House Price Index of Philadelphia, Pennsylvania ( ) Price index 2000=1 Years

33

34 Estimating the market price of housing (continued) B. Repeat sales Technique Statistical technique Assign -1 to year of first transaction Which dwelling units get sold most frequently? Market Assign 1 to year of second lemons! transaction Assign 0 to years with no transaction Regress change in selling prices (log) on years (-1,0,1) BE IT THE HEDONIC PRICE OR REPEAT SALES INDEX, WHAT IS ESTIMATED IS THE *MARKET* PRICE. IT IS NOT Results and Interpretation YOUR WILLINGNESS TO PAY! See table

35 OUR HYPOTHETICAL MARKET OF APPLES Price Supply Equilibrium price HOW TO ESTIMATE THE DEMAND FOR OWNER- OCCUPIED HOUSING? Equilibrium quantity Demand Quantity

36 Demand for owner-occupied housing Theory of demand: Shifts in demand may be caused by A. Income B. Price of substitutes / complements C. Preferences D. Population A. Income (see graph): Permanent income: Annuity equivalent of a person s life-time earnings Transitory income: How much a person s current earnings exceed or fall short of his / her permanent income Lifecycle Theory: Permanent income is important among owners because they borrow against their future income

37 Characteristics of the housing market Housing is not an identical product! Homogeneity vs. heterogeneity What is price measuring? Participants are not identical! Tenure choice Demographic events Housing is not easily malleable and purchasing it requires a large outlay! Financing Neighbourhood characteristics / externality Housing market is not a closed market! Search and uncertainty Household mobility

38

39

40 Demand for owner-occupied housing (continued) B. Price of substitutes (see graph): User cost of home ownership: Mortgage, tax, depreciation, maintenance, utilities, insurance, less capital gain

41 Price has decreased relative to rent

42 Demand for owner-occupied housing (continued) B. Price of substitutes (see graph): User cost of home ownership: Mortgage, tax, depreciation, maintenance, utilities, insurance, less capital gain C. D. Preferences / Population: Demographics: Household size, presence of child(ren), household composition (individuals or couples, lone parents), gender of household head

43 Demand for owner-occupied housing (continued) Data requirement: Microdata file (individuals) Income data Tenure data (owner vs. renter) Demographic and socioeconomic characteristics Statistics Canada publishes Public-use Microdata File (PUMF) for individuals / families / households Census (bicentennial) Statistics Canada also publishes another source: Household Incomes, Facilities and Equipments (HIFE) microdata file for households Annual Sample data: See SAS table

44 Demand for owner-occupied housing (continued) Technique: Statistical technique: Logit model of tenure choice Probability of being a home-owner, given income and all other variables Results and interpretation: See table for Ontario and Quebec

45 Logit model for tenure choice

46 Logit model for tenure choice

47 Logit model for tenure choice

48 Logit model for tenure choice

49 Housing expenditure among young households in Ontario

50 OUR HYPOTHETICAL MARKET OF APPLES Price Supply Equilibrium price HOW TO ESTIMATE THE SUPPLY OF OWNER-OCCUPIED HOUSING? Equilibrium quantity Demand Quantity

51 Supply of housing space To fix idea: Consider new dwelling units (housing spaces) The four-quadrant diagram

52 The supply of housing space: The four-quadrant model Price = perpetuity of rent Rent $ Demand = Supply Price $ Stock (sq. ft.) Construction depends on price Construction (sq. ft.) Stock adjustment: Flow of space = new construction depreciation (demolition)

53 Supply of housing space To fix idea: Consider new dwelling units (housing spaces) The four-quadrant diagram NEW UNITS REPRESENT ABOUT 20% OF ALL HOUSING SALES IN A METROPOLITAN REGION; THE REMAINING SALES ARE REPEAT SALES!

54 Supply of housing space and vendor s search behavior Good news: We can recover information from transacted properties as long as we are willing to make some assumptions

55 OUR HYPOTHETICAL MARKET OF APPLES Price Supply Equilibrium price Demand Equilibrium quantity Quantity

56 Supply of housing space and vendor s search behavior (continued) Good news: We can recover information from transacted properties as long as we are willing to make some assumptions Suppose time-on-market and length-of-tenure affect only the reservation price of the vendor Suppose number of concurrent listings in the neighbourhood affects only the offer price of the potential buyer Example: Markham data

57 Predicted values of transacted properties, MLS records of Markham (1999)

58 Predicted values of transacted properties, MLS records of Markham (1999)

59 Supply of housing space and vendor s search behavior (continued) Other considerations: Length of search also depends on vendor s equity position Risk aversion Fishing behavior Implications: Regional economic repercussion

60 Prices fluctuate in a much larger magnitude than ever before

61 OUR HYPOTHETICAL MARKET OF APPLES Price Supply Equilibrium price THIS DIAGRAM IS A STATIC DEPICTION OF A DYNAMIC MARKET! Demand Equilibrium quantity Quantity

62 Impact of increasing the standard deviation of housing values by $40,000, 1991 Source: Canada Census Enumeration Area, Map prepared by the author.

63 The risk of home-ownership Implications: Largest component of wealth of the typical household Macroeconomic repercussion Tenure choice and housing consumption often tie with demographic events Demographic structures Who is most vulnerable in economic shocks?

64 A HIDDEN COST IN THE HOUSING MARKET: THE RISK OF HOME-OWNERSHIP

The Effect of Relative Size on Housing Values in Durham

The Effect of Relative Size on Housing Values in Durham TheEffectofRelativeSizeonHousingValuesinDurham 1 The Effect of Relative Size on Housing Values in Durham Durham Research Paper Michael Ni TheEffectofRelativeSizeonHousingValuesinDurham 2 Introduction Real

More information

Sorting based on amenities and income

Sorting based on amenities and income Sorting based on amenities and income Mark van Duijn Jan Rouwendal m.van.duijn@vu.nl Department of Spatial Economics (Work in progress) Seminar Utrecht School of Economics 25 September 2013 Projects o

More information

Hedonic Pricing Model Open Space and Residential Property Values

Hedonic Pricing Model Open Space and Residential Property Values Hedonic Pricing Model Open Space and Residential Property Values Open Space vs. Urban Sprawl Zhe Zhao As the American urban population decentralizes, economic growth has resulted in loss of open space.

More information

METROPOLITAN COUNCIL S FORECASTS METHODOLOGY

METROPOLITAN COUNCIL S FORECASTS METHODOLOGY METROPOLITAN COUNCIL S FORECASTS METHODOLOGY FEBRUARY 28, 2014 Metropolitan Council s Forecasts Methodology Long-range forecasts at Metropolitan Council are updated at least once per decade. Population,

More information

METROPOLITAN COUNCIL S FORECASTS METHODOLOGY JUNE 14, 2017

METROPOLITAN COUNCIL S FORECASTS METHODOLOGY JUNE 14, 2017 METROPOLITAN COUNCIL S FORECASTS METHODOLOGY JUNE 14, 2017 Metropolitan Council s Forecasts Methodology Long-range forecasts at Metropolitan Council are updated at least once per decade. Population, households

More information

How should we measure residential property prices to inform policy makers?

How should we measure residential property prices to inform policy makers? How should we measure residential property prices to inform policy makers? Dr Jens Mehrhoff*, Head of Section Business Cycle, Price and Property Market Statistics * Jens This Mehrhoff, presentation Deutsche

More information

Chapter 7. Valuation Using the Sales Comparison and Cost Approaches. Copyright 2010 by The McGraw-Hill Companies, Inc. All rights reserved.

Chapter 7. Valuation Using the Sales Comparison and Cost Approaches. Copyright 2010 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 7 Valuation Using the Sales Comparison and Cost Approaches McGraw-Hill/Irwin Copyright 2010 by The McGraw-Hill Companies, Inc. All rights reserved. Decision Making in Commercial Real Estate Centers

More information

ANALYSIS OF RELATIONSHIP BETWEEN MARKET VALUE OF PROPERTY AND ITS DISTANCE FROM CENTER OF CAPITAL

ANALYSIS OF RELATIONSHIP BETWEEN MARKET VALUE OF PROPERTY AND ITS DISTANCE FROM CENTER OF CAPITAL ENGINEERING FOR RURAL DEVELOPMENT Jelgava, 23.-25.5.18. ANALYSIS OF RELATIONSHIP BETWEEN MARKET VALUE OF PROPERTY AND ITS DISTANCE FROM CENTER OF CAPITAL Eduard Hromada Czech Technical University in Prague,

More information

An overview of the real estate market the Fisher-DiPasquale-Wheaton model

An overview of the real estate market the Fisher-DiPasquale-Wheaton model An overview of the real estate market the Fisher-DiPasquale-Wheaton model 13 January 2011 1 Real Estate Market What is real estate? How big is the real estate sector? How does the market for the use of

More information

Cook County Assessor s Office: 2019 North Triad Assessment. Norwood Park Residential Assessment Narrative March 11, 2019

Cook County Assessor s Office: 2019 North Triad Assessment. Norwood Park Residential Assessment Narrative March 11, 2019 Cook County Assessor s Office: 2019 North Triad Assessment Norwood Park Residential Assessment Narrative March 11, 2019 1 Norwood Park Residential Properties Executive Summary This is the current CCAO

More information

2013 Profile of Home Buyers and Sellers Metro Indianapolis Report

2013 Profile of Home Buyers and Sellers Metro Indianapolis Report Prepared for: Metro Indianapolis Board of REALTORS Prepared by: Research Division December 2013 Table of Contents Introduction... 2 Highlights... 3 Conclusion... 6 Methodology..7 Report Prepared by: Jessica

More information

A Brief Overview of H-GAC s Regional Growth Forecast Methodology

A Brief Overview of H-GAC s Regional Growth Forecast Methodology A Brief Overview of H-GAC s Regional Growth Forecast Methodology -Houston-Galveston Area Council Email: forecast@h-gac.com Data updated; November 8, 2017 Introduction H-GAC releases an updated forecast

More information

Northgate Mall s Effect on Surrounding Property Values

Northgate Mall s Effect on Surrounding Property Values James Seago Economics 345 Urban Economics Durham Paper Monday, March 24 th 2013 Northgate Mall s Effect on Surrounding Property Values I. Introduction & Motivation Over the course of the last few decades

More information

Macro-prudential Policy in an Agent-Based Model of the UK Housing Market

Macro-prudential Policy in an Agent-Based Model of the UK Housing Market Macro-prudential Policy in an Agent-Based Model of the UK Housing Market Rafa Baptista, J Doyne Farmer, Marc Hinterschweiger, Katie Low, Daniel Tang, Arzu Uluc Heterogeneous Agents and Agent-Based Modeling:

More information

Department of Economics Working Paper Series

Department of Economics Working Paper Series Accepted in Regional Science and Urban Economics, 2002 Department of Economics Working Paper Series Racial Differences in Homeownership: The Effect of Residential Location Yongheng Deng University of Southern

More information

Waiting for Affordable Housing in NYC

Waiting for Affordable Housing in NYC Waiting for Affordable Housing in NYC Holger Sieg University of Pennsylvania and NBER Chamna Yoon KAIST October 16, 2018 Affordable Housing Policies Affordable housing policies are increasingly popular

More information

Housing Supply Restrictions Across the United States

Housing Supply Restrictions Across the United States Housing Supply Restrictions Across the United States Relaxed building regulations can help labor flow and local economic growth. RAVEN E. SAKS LABOR MOBILITY IS the dominant mechanism through which local

More information

2018 Profile of Home Buyers and Sellers

2018 Profile of Home Buyers and Sellers Massachusetts Report Prepared for: Massachusetts Association of REALTORS Prepared by: Research Division December 2018 Massachusetts Report Table of Contents Introduction... 2 Highlights... 4 Methodology...

More information

Review of the Prices of Rents and Owner-occupied Houses in Japan

Review of the Prices of Rents and Owner-occupied Houses in Japan Review of the Prices of Rents and Owner-occupied Houses in Japan Makoto Shimizu mshimizu@stat.go.jp Director, Price Statistics Office Statistical Survey Department Statistics Bureau, Japan Abstract The

More information

Regional Housing Trends

Regional Housing Trends Regional Housing Trends A Look at Price Aggregates Department of Economics University of Missouri at Saint Louis Email: rogerswil@umsl.edu January 27, 2011 Why are Housing Price Aggregates Important? Shelter

More information

Re-sales Analyses - Lansink and MPAC

Re-sales Analyses - Lansink and MPAC Appendix G Re-sales Analyses - Lansink and MPAC Introduction Lansink Appraisal and Consulting released case studies on the impact of proximity to industrial wind turbines (IWTs) on sale prices for properties

More information

Gregory W. Huffman. Working Paper No. 01-W22. September 2001 DEPARTMENT OF ECONOMICS VANDERBILT UNIVERSITY NASHVILLE, TN 37235

Gregory W. Huffman. Working Paper No. 01-W22. September 2001 DEPARTMENT OF ECONOMICS VANDERBILT UNIVERSITY NASHVILLE, TN 37235 DO VALUES OF EXISTING HOME SALES REFLECT PROPERTY VALUES? by Gregory W. Huffman Working Paper No. 01-W September 001 DEPARTMENT OF ECONOMICS VANDERBILT UNIVERSITY NASHVILLE, TN 3735 www.vanderbilt.edu/econ

More information

A STUDY OF THE DISTRICT OF COLUMBIA S APARTMENT RENTAL MARKET 2000 TO 2015: THE ROLE OF MILLENNIALS

A STUDY OF THE DISTRICT OF COLUMBIA S APARTMENT RENTAL MARKET 2000 TO 2015: THE ROLE OF MILLENNIALS A STUDY OF THE DISTRICT OF COLUMBIA S APARTMENT RENTAL MARKET 2000 TO 2015: THE ROLE OF MILLENNIALS Fahad Fahimullah, Yi Geng, & Daniel Muhammad Office of Revenue Analysis District of Columbia Government

More information

New Hampshire Report. Prepared for: New Hampshire Association of REALTORS. Prepared by: NATIONAL ASSOCIATION OF REALTORS.

New Hampshire Report. Prepared for: New Hampshire Association of REALTORS. Prepared by: NATIONAL ASSOCIATION OF REALTORS. New Hampshire Report Prepared for: New Hampshire Association of REALTORS Prepared by: Research Division January 2016 New Hampshire Report Table of Contents Introduction... 2 Highlights... 3 Methodology..8

More information

Charlotte Report. Prepared for: Greater Regional Charlotte Association of REALTORS. Prepared by: NATIONAL ASSOCIATION OF REALTORS.

Charlotte Report. Prepared for: Greater Regional Charlotte Association of REALTORS. Prepared by: NATIONAL ASSOCIATION OF REALTORS. Charlotte Report Prepared for: Greater Regional Charlotte Association of REALTORS Prepared by: Research Division January 2016 Charlotte Report Table of Contents Introduction... 2 Highlights... 3 Methodology..8

More information

2017 Profile of Home Buyers and Sellers

2017 Profile of Home Buyers and Sellers New Jersey Report Prepared for: New Jersey REALTORS Prepared by: Research Division December 2017 New Jersey Report Table of Contents Introduction... 2 Highlights... 4 Methodology... 8 Report Prepared by:

More information

5. PROPERTY VALUES. In this section, we focus on the economic impact that AMDimpaired

5. PROPERTY VALUES. In this section, we focus on the economic impact that AMDimpaired 5. PROPERTY VALUES In this section, we focus on the economic impact that AMDimpaired streams have on residential property prices. AMD lends itself particularly well to property value analysis because its

More information

Estimating User Accessibility Benefits with a Housing Sales Hedonic Model

Estimating User Accessibility Benefits with a Housing Sales Hedonic Model Estimating User Accessibility Benefits with a Housing Sales Hedonic Model Michael Reilly Metropolitan Transportation Commission mreilly@mtc.ca.gov March 31, 2016 Words: 1500 Tables: 2 @ 250 words each

More information

Objectives of Housing Task Force: Some Background

Objectives of Housing Task Force: Some Background 2 nd Meeting of the Housing Task Force March 12, 2018 World Bank, Washington, DC Objectives of Housing Task Force: Some Background Background What are the goals of ICP comparisons of housing services?

More information

How to Read a Real Estate Appraisal Report

How to Read a Real Estate Appraisal Report How to Read a Real Estate Appraisal Report Much of the private, corporate and public wealth of the world consists of real estate. The magnitude of this fundamental resource creates a need for informed

More information

Effects of Zoning on Residential Option Value. Jonathan C. Young RESEARCH PAPER

Effects of Zoning on Residential Option Value. Jonathan C. Young RESEARCH PAPER Effects of Zoning on Residential Option Value By Jonathan C. Young RESEARCH PAPER 2004-12 Jonathan C. Young Department of Economics West Virginia University Business and Economics BOX 41 Morgantown, WV

More information

Real Estate Appraisal

Real Estate Appraisal Market Value Chapter 17 Real Estate Appraisal This presentation includes materials from Ling and Archer, 4 th edition, Real Estate Principles The highest price a property will bring if: Payment is made

More information

THE LEGAL AND FINANCIAL FRAMEWORK OF AN EFFICIENT PRIVATE RENTAL SECTOR: THE GERMAN EXPERIENCE

THE LEGAL AND FINANCIAL FRAMEWORK OF AN EFFICIENT PRIVATE RENTAL SECTOR: THE GERMAN EXPERIENCE THE LEGAL AND FINANCIAL FRAMEWORK OF AN EFFICIENT PRIVATE RENTAL SECTOR: THE GERMAN EXPERIENCE Presenter: Prof.Dr.rer.pol. Stefan Kofner, MCIH Budapest, MRI Silver Jubilee 3. November 2014 MRI Silver Jubilee

More information

How to lick the cap rate problem

How to lick the cap rate problem 1 How to lick the cap rate problem (well, almost!) by Erwin G. Rode, who is a Professional Valuer Originally published in Rode s Report on the SA Property Market, issue 1989:3, but updated and expanded

More information

URBAN AND REAL ESTATE ECONOMICS

URBAN AND REAL ESTATE ECONOMICS URBAN AND REAL ESTATE ECONOMICS URBAN AND REAL ESTATE ECONOMICS Sponsored by a Grant TÁMOP-4.1.2-08/2/A/KMR-2009-0041 Course Material Developed by Department of Economics, Faculty of Social Sciences, Eötvös

More information

7224 Nall Ave Prairie Village, KS 66208

7224 Nall Ave Prairie Village, KS 66208 Real Results - Income Package 10/20/2014 TABLE OF CONTENTS SUMMARY RISK Summary 3 RISC Index 4 Location 4 Population and Density 5 RISC Influences 5 House Value 6 Housing Profile 7 Crime 8 Public Schools

More information

Geographic Variations in Resale Housing Values Within a Metropolitan Area: An Example from Suburban Phoenix, Arizona

Geographic Variations in Resale Housing Values Within a Metropolitan Area: An Example from Suburban Phoenix, Arizona INTRODUCTION Geographic Variations in Resale Housing Values Within a Metropolitan Area: An Example from Suburban Phoenix, Arizona Diane Whalley and William J. Lowell-Britt The average cost of single family

More information

A Real-Option Based Dynamic Model to Simulate Real Estate Developer Behavior

A Real-Option Based Dynamic Model to Simulate Real Estate Developer Behavior 223-Paper A Real-Option Based Dynamic Model to Simulate Real Estate Developer Behavior Mi Diao, Xiaosu Ma and Joseph Ferreira, Jr. Abstract Real estate developers are facing a dynamic and volatile market

More information

HOUSING AFFORDABILITY

HOUSING AFFORDABILITY HOUSING AFFORDABILITY (RENTAL) 2016 A study for the Perth metropolitan area Research and analysis conducted by: In association with industry experts: And supported by: Contents 1. Introduction...3 2. Executive

More information

Rockwall CAD. Basics of. Appraising Property. For. Property Taxation

Rockwall CAD. Basics of. Appraising Property. For. Property Taxation Rockwall CAD Basics of Appraising Property For Property Taxation ROCKWALL CENTRAL APPRAISAL DISTRICT 841 Justin Rd. Rockwall, Texas 75087 972-771-2034 Fax 972-771-6871 Introduction Rockwall Central Appraisal

More information

(a) Assets arising from construction contracts (see Section 23 of FRS 102, Revenue); and

(a) Assets arising from construction contracts (see Section 23 of FRS 102, Revenue); and Impairment of assets 14.1 This section sets out the considerations for social landlords in assessing impairment of assets, which is dealt with in Section 27 of FRS 102, Impairment of Assets. 14.2 Social

More information

86 years in the making Caspar G Haas 1922 Sales Prices as a Basis for Estimating Farmland Value

86 years in the making Caspar G Haas 1922 Sales Prices as a Basis for Estimating Farmland Value 2 Our Journey Begins 86 years in the making Caspar G Haas 1922 Sales Prices as a Basis for Estimating Farmland Value Starting at the beginning. Mass Appraisal and Single Property Appraisal Appraisal

More information

Description of IHS Hedonic Data Set and Model Developed for PUMA Area Price Index

Description of IHS Hedonic Data Set and Model Developed for PUMA Area Price Index MAY 2015 Description of IHS Hedonic Data Set and Model Developed for PUMA Area Price Index Introduction Understanding and measuring house price trends in small geographic areas has been one of the most

More information

General Market Analysis and Highest & Best Use. Learning Objectives

General Market Analysis and Highest & Best Use. Learning Objectives General Market Analysis and Highest & Best Use Learning Objectives Module & Title Module 1 Real Estate Markets and Analysis Module 2 Types and Levels of Market Analysis Module 3 The Six-Step Process and

More information

Following is an example of an income and expense benchmark worksheet:

Following is an example of an income and expense benchmark worksheet: After analyzing income and expense information and establishing typical rents and expenses, apply benchmarks and base standards to the reappraisal area. Following is an example of an income and expense

More information

School Quality and Property Values. In Greenville, South Carolina

School Quality and Property Values. In Greenville, South Carolina Department of Agricultural and Applied Economics Working Paper WP 423 April 23 School Quality and Property Values In Greenville, South Carolina Kwame Owusu-Edusei and Molly Espey Clemson University Public

More information

Oil & Gas Lease Auctions: An Economic Perspective

Oil & Gas Lease Auctions: An Economic Perspective Oil & Gas Lease Auctions: An Economic Perspective March 15, 2010 Presented by: The Florida Legislature Office of Economic and Demographic Research 850.487.1402 http://edr.state.fl.us Bidding for Oil &

More information

Meet Definition of. Be investment property. & Follow FV Model. Earn Rentals

Meet Definition of. Be investment property. & Follow FV Model. Earn Rentals Meet Definition of Requirements It s Property Held to Use in Production Process Or Admin Purpose Earn Capital Appreciation Earn Rentals & Follow Model Instead of And Available on Property By Property Basis

More information

THE EFFECT OF PROXIMITY TO PUBLIC TRANSIT ON PROPERTY VALUES

THE EFFECT OF PROXIMITY TO PUBLIC TRANSIT ON PROPERTY VALUES THE EFFECT OF PROXIMITY TO PUBLIC TRANSIT ON PROPERTY VALUES Public transit networks are essential to the functioning of a city. When purchasing a property, some buyers will try to get as close as possible

More information

A statistical system for. Residential Property Price Indices. David Fenwick

A statistical system for. Residential Property Price Indices. David Fenwick A statistical system for Residential Property Price Indices Eurostat IAOS IFC Conference on Residential Property Price Indices Hosted by the Bank for International Settlements 11-12 November 2009, Basle

More information

Leases. (a) the lease transfers ownership of the asset to the lessee by the end of the lease term.

Leases. (a) the lease transfers ownership of the asset to the lessee by the end of the lease term. Leases 1.1. Classification of leases A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. A lease is classified as an operating lease

More information

Cube Land integration between land use and transportation

Cube Land integration between land use and transportation Cube Land integration between land use and transportation T. Vorraa Director of International Operations, Citilabs Ltd., London, United Kingdom Abstract Cube Land is a member of the Cube transportation

More information

George Mason and Hofstra Universities July 2011

George Mason and Hofstra Universities July 2011 The American Housing Survey Suburbs and the 2010 Census George Mason and Hofstra Universities July 2011 Topics About the American Housing Survey (AHS) Accessing the AHS Public versus Internal Use Files

More information

Real Estate Economics MBAX 6630 Course Syllabus for Fall 2013

Real Estate Economics MBAX 6630 Course Syllabus for Fall 2013 Real Estate Economics MBAX 6630 Course Syllabus for Fall 2013 Lectures: Instructor: Office: Office Hours: Phone: Email: Wednesday 6:30pm-9:15pm in Koelbel S127 Professor Thomas G. Thibodeau Koelbel S417

More information

*Predicted median absolute deviation of a CASA value estimate from the sale price

*Predicted median absolute deviation of a CASA value estimate from the sale price PLATINUMdata Premier AVM Products ACA The AVM offers lenders a concise one-page summary of a property s current estimated value, complete with five recent comparable sales, neighborhood value data, homeowner

More information

CONSUMER CONFIDENCE AND REAL ESTATE MARKET PERFORMANCE GO HAND-IN-HAND

CONSUMER CONFIDENCE AND REAL ESTATE MARKET PERFORMANCE GO HAND-IN-HAND CONSUMER CONFIDENCE AND REAL ESTATE MARKET PERFORMANCE GO HAND-IN-HAND The job market, mortgage interest rates and the migration balance are often considered to be the main determinants of real estate

More information

IREDELL COUNTY 2015 APPRAISAL MANUAL

IREDELL COUNTY 2015 APPRAISAL MANUAL STATISTICS AND THE APPRAISAL PROCESS INTRODUCTION Statistics offer a way for the appraiser to qualify many of the heretofore qualitative decisions which he has been forced to use in assigning values. In

More information

2012 Profile of Home Buyers and Sellers New Jersey Report

2012 Profile of Home Buyers and Sellers New Jersey Report Prepared for: New Jersey Association of REALTORS Prepared by: Research Division December 2012 Table of Contents Introduction... 2 Highlights... 4 Conclusion... 7 Report Prepared by: Jessica Lautz 202-383-1155

More information

Messung der Preise Schwerin, 16 June 2015 Page 1

Messung der Preise Schwerin, 16 June 2015 Page 1 New weighting schemes in the house price indices of the Deutsche Bundesbank How should we measure residential property prices to inform policy makers? Elena Triebskorn*, Section Business Cycle, Price and

More information

Using Hedonics to Create Land and Structure Price Indexes for the Ottawa Condominium Market

Using Hedonics to Create Land and Structure Price Indexes for the Ottawa Condominium Market Using Hedonics to Create Land and Structure Price Indexes for the Ottawa Condominium Market Kate Burnett Isaacs Statistics Canada May 21, 2015 Abstract: Statistics Canada is developing a New Condominium

More information

MAAO Sales Ratio Committee 2013 Fall Conference Seminar

MAAO Sales Ratio Committee 2013 Fall Conference Seminar MAAO Sales Ratio Committee 2013 Fall Conference Seminar Presented By: Al Whitcomb Dakota County (Retired) John Keefe Chisago County Assessor Brent Reid City of Coon Rapids Michael Thompson Scott County

More information

Chapter 8. How much would you pay today for... The Income Approach to Appraisal

Chapter 8. How much would you pay today for... The Income Approach to Appraisal How much would you pay today for... Chapter 8 One hundred dollars paid with certainty each year for five years, starting one year from now. Why would you pay less than $500 Valuation Using the Income Approach

More information

Technical Description of the Freddie Mac House Price Index

Technical Description of the Freddie Mac House Price Index Technical Description of the Freddie Mac House Price Index 1. Introduction Freddie Mac publishes the monthly index values of the Freddie Mac House Price Index (FMHPI SM ) each quarter. Index values are

More information

Real Estate Economics MBAX 6630 Course Syllabus for Fall 2015

Real Estate Economics MBAX 6630 Course Syllabus for Fall 2015 Real Estate Economics MBAX 6630 Course Syllabus for Fall 2015 Lectures: Tuesdays and Thursdays 3:30pm-4:45pm KOBL 220 Instructor: Professor Thomas G. Thibodeau Office: Koelbel S417 Office Hours: TuTh 9:00am-11:00am,

More information

2013 Profile of Home Buyers and Sellers Texas Report

2013 Profile of Home Buyers and Sellers Texas Report 2013 Profile of Home Buyers and Sellers Report Prepared for: Association of REALTORS Prepared by: NATIONAL ASSOCIATION OF REALTORS Research Division December 2013 2013 Profile of Home Buyers and Sellers

More information

Interest Rates and Fundamental Fluctuations in Home Values

Interest Rates and Fundamental Fluctuations in Home Values Interest Rates and Fundamental Fluctuations in Home Values Albert Saiz 1 Focus Saiz Interest Rates and Fundamentals Changes in the user cost of capital driven by lower interest/mortgage rates and financial

More information

Annual Report On Our National Real Estate Market

Annual Report On Our National Real Estate Market A TWINCITIESPROPERTYFINDER.COM RESOURCE Annual Report On Our National Real Estate Market 1 Contents Industry Facts 3 Mortgage Stats 4 Distressed Properties & Price Information 5 Today s Buyer 6 First-Time

More information

Volume 35, Issue 1. Hedonic prices, capitalization rate and real estate appraisal

Volume 35, Issue 1. Hedonic prices, capitalization rate and real estate appraisal Volume 35, Issue 1 Hedonic prices, capitalization rate and real estate appraisal Gaetano Lisi epartment of Economics and Law, University of assino and Southern Lazio Abstract Studies on real estate economics

More information

2. The, and Act, also known as FIRREA, requires that states set standards for all appraisers.

2. The, and Act, also known as FIRREA, requires that states set standards for all appraisers. CHAPTER 4 SHORT-ANSWER QUESTIONS 1. An appraisal is an or of value. 2. The, and Act, also known as FIRREA, requires that states set standards for all appraisers. 3. Value in real estate is the "present

More information

Connecticut Report. Prepared for: Connecticut Association of REALTORS. Prepared by: NATIONAL ASSOCIATION OF REALTORS. Research Division.

Connecticut Report. Prepared for: Connecticut Association of REALTORS. Prepared by: NATIONAL ASSOCIATION OF REALTORS. Research Division. 2015 Profile of Home Buyers and Sellers Report Prepared for: Association of REALTORS Prepared by: NATIONAL ASSOCIATION OF REALTORS Research Division January 2016 2015 Profile of Home Buyers and Sellers

More information

Chapter 5: Inside the City II: A Closer Look

Chapter 5: Inside the City II: A Closer Look Chapter 5: Inside the City II: A Closer Look Introduction Chapter 4 & the Monocentric City Model presented the basics, but we need to broaden our study of urban form and land value to include some key

More information

University of Nizwa / Dept. of Architecture / ARCH 506: Building Specification & Estimation / VALUATION / Ravishankar. KR / 5, January 2011.

University of Nizwa / Dept. of Architecture / ARCH 506: Building Specification & Estimation / VALUATION / Ravishankar. KR / 5, January 2011. Property Valuation Building Estimation and Costing Building Estimation and Costing Building Estimation and Costing is a vital part of Civil Engineering. No project can begin without the total Building

More information

Economic Organization and the Lease- Ownership Decision in Water

Economic Organization and the Lease- Ownership Decision in Water Economic Organization and the Lease- Ownership Decision in Water Kyle Emerick & Dean Lueck Conference on Contracts, Procurement and Public- Private Agreements Paris -- May 30-31, 2011 ABSTRACT This paper

More information

Price Indices: What is Their Value?

Price Indices: What is Their Value? SKBI Annual Conferece May 7, 2013 Price Indices: What is Their Value? Susan M. Wachter Richard B. Worley Professor of Financial Management Professor of Real Estate and Finance Overview I. Why indices?

More information

Volume Author/Editor: W. Erwin Diewert, John S. Greenlees and Charles R. Hulten, editors

Volume Author/Editor: W. Erwin Diewert, John S. Greenlees and Charles R. Hulten, editors This PDF is a selection from a published volume from the National Bureau of Economic Research Volume Title: Price Index Concepts and Measurement Volume Author/Editor: W. Erwin Diewert, John S. Greenlees

More information

DATA APPENDIX. 1. Census Variables

DATA APPENDIX. 1. Census Variables DATA APPENDIX 1. Census Variables House Prices. This section explains the construction of the house price variable used in our analysis, based on the self-report from the restricted-access version of the

More information

Introduction Public Housing Education Ethnicity, Segregation, Transactions. Neighborhood Change. Drivers and Effects.

Introduction Public Housing Education Ethnicity, Segregation, Transactions. Neighborhood Change. Drivers and Effects. Drivers and Effects January 29, 2010 Urban Environments and Catchphrases often used in the urban economic literature Ghetto, segregation, gentrification, ethnic enclave, revitalization... Phenomena commonly

More information

DEMAND FR HOUSING IN PROVINCE OF SINDH (PAKISTAN)

DEMAND FR HOUSING IN PROVINCE OF SINDH (PAKISTAN) 19 Pakistan Economic and Social Review Volume XL, No. 1 (Summer 2002), pp. 19-34 DEMAND FR HOUSING IN PROVINCE OF SINDH (PAKISTAN) NUZHAT AHMAD, SHAFI AHMAD and SHAUKAT ALI* Abstract. The paper is an analysis

More information

Chapter 13. The Market Approach to Value

Chapter 13. The Market Approach to Value Chapter 13 The Market Approach to Value 11/22/2005 FIN4777 - Special Topics in Real Estate - Professor Rui Yao 1 Introduction Definition: An approach to estimating market value of a subject property by

More information

AGEC 603. Real Estate. Property and Capital Markets

AGEC 603. Real Estate. Property and Capital Markets AGEC 603 Property and Capital Markets Real Estate National of buildings, the land built on, and vacant land Value second largest component of wealth Measured both as a flow and a stock Flow value of new

More information

Chapter 8. How much would you pay today for... The Income Approach to Appraisal

Chapter 8. How much would you pay today for... The Income Approach to Appraisal How much would you pay today for... Chapter 8 One hundred dollars paid with certainty each year for five years, starting one year from now. Why would you pay less than $500 Valuation Using the Income Approach

More information

86M 4.2% Executive Summary. Valuation Whitepaper. The purposes of this paper are threefold: At a Glance. Median absolute prediction error (MdAPE)

86M 4.2% Executive Summary. Valuation Whitepaper. The purposes of this paper are threefold: At a Glance. Median absolute prediction error (MdAPE) Executive Summary HouseCanary is developing the most accurate, most comprehensive valuations for residential real estate. Accurate valuations are the result of combining the best data with the best models.

More information

International Comparison Program [01.06] Owner Occupied Housing Notes on the Treatment of Housing in the National Accounts and the ICP Global Office

International Comparison Program [01.06] Owner Occupied Housing Notes on the Treatment of Housing in the National Accounts and the ICP Global Office Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized International Comparison Program [01.06] Owner Occupied Housing Notes on the Treatment

More information

The Improved Net Rate Analysis

The Improved Net Rate Analysis The Improved Net Rate Analysis A discussion paper presented at Massey School Seminar of Economics and Finance, 30 October 2013. Song Shi School of Economics and Finance, Massey University, Palmerston North,

More information

2012 Profile of Home Buyers and Sellers Texas Report

2012 Profile of Home Buyers and Sellers Texas Report 2012 Profile of Home and Sellers Report Prepared for: Association of REALTORS Prepared by: NATIONAL ASSOCIATION OF REALTORS Research Division December 2012 2012 Profile of Home and Sellers Report Table

More information

REDSTONE. Regression Fundamentals.

REDSTONE. Regression Fundamentals. REDSTONE from Bradford Advanced Analytics Technologies for Appraisers Regression Fundamentals www.bradfordsoftware.com/redstone Bradford Technologies, Inc. 302 Piercy Road San Jose, CA 95138 800-622-8727

More information

Developing a Residential Property Price Index (RPPI) for Canada: Approach, Risks and Challenges

Developing a Residential Property Price Index (RPPI) for Canada: Approach, Risks and Challenges Developing a Residential Property Price Index (RPPI) for Canada: Approach, Risks and Challenges Room document for the 13 th Ottawa Group Meeting Copenhagen, Denmark May 2013 Statistics Canada 2 Abstract

More information

CABARRUS COUNTY 2016 APPRAISAL MANUAL

CABARRUS COUNTY 2016 APPRAISAL MANUAL STATISTICS AND THE APPRAISAL PROCESS PREFACE Like many of the technical aspects of appraising, such as income valuation, you have to work with and use statistics before you can really begin to understand

More information

Identifying the Benefits from Home Ownership: A Swedish Experiment

Identifying the Benefits from Home Ownership: A Swedish Experiment Identifying the Benefits from Home Ownership: A Swedish Experiment Paolo Sodini 1 Stijn Van Nieuwerburgh 2 Roine Vestman 3 Ulf von Lilienfeld-Toal 4 1 Stockholm School of Economics 2 NYU Stern, NBER, CEPR

More information

EN Official Journal of the European Union L 320/323

EN Official Journal of the European Union L 320/323 29.11.2008 EN Official Journal of the European Union L 320/323 INTERNATIONAL ACCOUNTING STANDARD 40 Investment property OBJECTIVE 1 The objective of this standard is to prescribe the accounting treatment

More information

Chapter 7. Objective1 Assess Costs and Benefits of Renting. Chapter Objectives

Chapter 7. Objective1 Assess Costs and Benefits of Renting. Chapter Objectives Chapter 7 Selecting and Financing Housing McGraw-Hill/Irwin Copyright 2010 by The McGraw-Hill Companies, Inc. All rights reserved. Selecting and Financing Housing Chapter Objectives 1. Assess costs and

More information

Washington Department of Revenue Property Tax Division. Valid Sales Study Kitsap County 2015 Sales for 2016 Ratio Year.

Washington Department of Revenue Property Tax Division. Valid Sales Study Kitsap County 2015 Sales for 2016 Ratio Year. P. O. Box 47471 Olympia, WA 98504-7471. Washington Department of Revenue Property Tax Division Valid Sales Study Kitsap County 2015 Sales for 2016 Ratio Year Sales from May 1, 2014 through April 30, 2015

More information

ECONOMIC AND MONETARY DEVELOPMENTS

ECONOMIC AND MONETARY DEVELOPMENTS Box EURO AREA HOUSE PRICES AND THE RENT COMPONENT OF THE HICP In the euro area, as in many other economies, expenditures on buying a house or flat are not incorporated directly into consumer price indices,

More information

An intangible asset is an identifiable non-monetary asset without physical substance.

An intangible asset is an identifiable non-monetary asset without physical substance. Technical Summary This extract has been prepared by IASC Foundation staff and has not been approved by the IASB. For the requirements reference must be made to International Financial Reporting Standards.

More information

Relationship of age and market value of office buildings in Tirana City

Relationship of age and market value of office buildings in Tirana City Relationship of age and market value of office buildings in Tirana City Phd. Elfrida SHEHU Polytechnic University of Tirana Civil Engineering Department of Civil Engineering Faculty Tirana, Albania elfridaal@yahoo.com

More information

California Real Estate License Exam Prep: Unlocking the DRE Salesperson and Broker Exam 4th Edition

California Real Estate License Exam Prep: Unlocking the DRE Salesperson and Broker Exam 4th Edition California Real Estate License Exam Prep: Unlocking the DRE Salesperson and Broker Exam 4th Edition ANSWER SHEET INSTRUCTIONS: The exam consists of multiple choice questions. Multiple choice questions

More information

Real Estate Boom and Misallocation of Capital in China

Real Estate Boom and Misallocation of Capital in China Real Estate Boom and Misallocation of Capital in China Ting Chen, Princeton & CUHK Shenzhen Laura Xiaolei Liu, Peking University Wei Xiong, Princeton & CUHK Shenzhen Li-An Zhou, Peking University December

More information

Causes & Consequences of Evictions in Britain October 2016

Causes & Consequences of Evictions in Britain October 2016 I. INTRODUCTION Causes & Consequences of Evictions in Britain October 2016 Across England, the private rental sector has become more expensive and less secure. Tenants pay an average of 47% of their net

More information

Chapter 09. Chapter 9 Learning Objectives. Housing Alternatives by life stage. The Decision: Factors and Finances

Chapter 09. Chapter 9 Learning Objectives. Housing Alternatives by life stage. The Decision: Factors and Finances Chapter 09 The Decision: Factors and Finances McGraw-Hill/Irwin Copyright 2012 by The McGraw-Hill Companies, Inc. All rights reserved. 9-1 Chapter 9 Learning Objectives 1. Evaluate available housing alternatives

More information

GENERAL ASSESSMENT DEFINITIONS

GENERAL ASSESSMENT DEFINITIONS 21st Century Appraisals, Inc. GENERAL ASSESSMENT DEFINITIONS Ad Valorem tax. A tax levied in proportion to the value of the thing(s) being taxed. Exclusive of exemptions, use-value assessment laws, and

More information