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This study evaluates the existence of asset bubbles in Florida metropolitan statistical areas during 2000-2010. Estimation occurs in two stages with the first being the estimated fundamental price of housing using a fixed effects estimator. Once the fundamental price of housing is determined an error correction model of housing prices is estimated to evaluate the degrees of serial correlation and mean reversion existing in the sampled geographic areas. Serial correlation and mean reversion are then interacted with the hypothesized effects of information costs, supply costs, and expectations of future price behavior to uncover variation in the dynamic response of housing. The results suggest that fluctuations in home sale transactions volume, construction costs, and expectations of future price behavior interact with market dynamics.
House prices and mortgage debt have moved to centre stage in the management of national economies, regional development and neighbourhood change. Describing, analysing and understanding how housing markets work within and across these scales of economy and society has never been more urgent. But much more is known about the macro-scales than the microstructures; and about the economic rather than social drivers of housing market dynamics. This book redresses the balance. It shows that housing markets are social, cultural and psychological – as well as economic – affairs. This multidisciplinary approach is helpful in understanding the economic staples of supply, demand, price and information. It also casts new light on the emotional and political economy of markets.
The goal of this thesis is to examine the time-varying dynamics of the housing market in the United States, Netherlands, France and Italy. To this end, housing dynamics are analyzed in a time-varying parameter vector autoregressive model with stochastic volatility (TVP-SV-VAR). A monetary policy, housing supply, housing demand and productivity shock to the non-housing sector are identified by sign restrictions. The empirical evidence demonstrates the need to account for time variation in both coefficients and volatilities. For all countries except France, structural analysis indicates that the reaction of house prices to a monetary policy shock is weaker when property markets are bullish. In France, where no asymmetric pattern in visible, increased responsiveness appears to coincide with mortgage market liberalization. Historical decomposition suggests that monetary policy shocks only played a supporting role in the recent housing boom, whereas housing-related and productivity shocks have fueled house price growth at the turn of the millennium.
This book re-examines the role of urban policy and planning in relation to the housing market in an era of global uncertainty and change. The relationship between planning and the housing market is a contested problem across research, policy, and practice. Problems with housing supply and affordability in many nations have been linked to planning system constraints, while the global financial crisis has raised new questions about the role of urban planning regulation and processes in responding to housing market trends. With reference to international cases from the United Kingdom, the United States, Ireland, Hong Kong and Australia, the book examines how different systems of urban planning and governance address complex and dynamic housing market trends. It also offers practical guidance on how urban planning can support an efficient supply of appropriate and affordable homes in preferred locations. A detailed study, which explains and decodes the workings of the planning system and housing market, this book will be of particular interest to scholars of human geography and urban planning, as well as housing policy makers and practitioners. To view Nicole Gurran’s related TEDx talk please visit: Housing Crisis? How about housing solutions. TEDx Sydney 2018 (http://bit.ly/2psfpMw)
The speed with which its house prices respond to real economic shocks is critical to the functioning of an economic market. This speed is determined relative to the magnitudes of house price changes on the off-equilibrium path, as the market adjusts. When such changes are caused by an unexpected shift in housing demand, which is a substantial component of the variation in house prices, the magnitudes are determined by the elasticity of housing supply. I examine local housing-supply dynamics in each of 47 U.S. metropolitan-area housing markets using a unique market-level panel dataset. The data are analyzed with a conditional vector-autoregression, which characterizes the dynamic responses of housing price and stock to an increase in housing demand caused by a shift in employment. These response time-paths are used to create measures of short-, medium-, and long-run supply elasticities. Both the time-paths and the implied elasticities vary widely. I use several area characteristics to explain the variation in the supply elasticity measures across metropolitan areas. The results suggest that an area's population, land area, historical growth rate, region, January temperature, age of housing stock and incentive to regulate housing are all important determinants of a market's house-price response.
Presents a theory of short-run market adjustments to exogenous demand shifts that is consistent with evidence from the Housing Assistance Supply Experiment (HASE). It is argued that (1) a 1.0 percent shift in rental demand leads to a rent change of only 0.26 percent, whereas capital value can change as much as 5.0 percent; and (2) landlords derive capital value in a tightening market primarily from decreased vacancy loss (because of monopolistic competition among themselves) rather than from increased nominal rent. Using HASE data, the theory predicts that a housing allowance program would cause short-run rent increases of 0.6 to 1.0 percent and capital value increases of 1.6 to 6.5 percent, depending on the size and duration of allowance-induced demand shifts.
The key stylized facts of the housing market are positive serial correlation of price changes at one year frequencies and mean reversion over longer periods, strong persistence in construction, and highly volatile prices and construction levels within markets over time. We calibrate a dynamic model of housing in the spatial equilibrium tradition of Rosen and Roback to see whether such a model can generate these facts. With reasonable parameter values, this model readily explains the mean reversion of prices over five year periods, but cannot explain the observed positive serial correlation at higher frequencies. The model predicts the positive serial correlation of new construction that we see in the data and the volatility of both prices and quantities in the typical market, and it can account for substantial variation on construction intensity across markets. However, the model cannot explain the most volatile markets in terms of low frequency price changes. More research is needed to determine whether measurement error-related data smoothing or market inefficiency can best account for the persistence of high frequency price changes. With respect to the extremely high house price change volatility in certain coastal markets, more research is needed to ascertain whether shocks to interest rates or better measurement of local income variability can match this moment of data without appealing to some type of animal spirits.
This document has evolved over three years to meet the need for a more comprehensive understanding of how neighborhoods change. The Office of Policy Development and Research at HUD formulated policy alternatives to stem the rising tide of abandoned residential buildings. It showed abandonment as the last stage of a process, not a random or isolated phenomenon. The failure of programs to counteract and halt the decline of neighborhoods has stemmed mainly from an imperfect understanding of this process. There have also been political problems with acting in neighborhoods before the symptoms were painfully evident and from the tendency of program developers to deal with the house, rather than the people who own it, rent it, loan on it, or insure it. Few programs have recognized that those people were part of a total neighborhood rather than occupants of individual buildings. The process of neighborhood change is triggered and fueled by individual, collective and institutional decisions. These are made by a myriad of people-households, bankers, real estate brokers, investors, speculators, public service providers (police, fire, schools, sanitation, etc.) and others. It is a reasonable conclusion that if a concentrated effort is made to affect these decisions then neighborhood decline can be slowed, halted, or in some circumstances, reversed.
Explains how we got into the current economic disaster that developed out of the economics and politics of the housing boom and bust. The "creative" financing of home mortgages and "creative" marketing of financial securities based on these mortgages to countries around the world, are part of the story of how a financial house of cards was built up--and then collapsed.