Home Sales Research Articles

I can hear my neighbors' fracking: The effect of natural gas production on housing values in Tarrant County, TX

In this study we estimate the effect of hydraulically fractured natural gas wells on residential real estate prices. We exploit variation in distance to nearby gas wells in home sale prices to estimate this effect. In contrast to previous studies, we focus on a relatively densely populated area, a section of the Dallas–Ft. Worth–Arlington urban area. Using a dataset of 127,556 observations from Tarrant County, Texas over the period 2005–2011, we find robust evidence that increased proximity to a well leads to reduced home sale prices. Existence of wells within 3500ft of a property reduces property values by approximately 1.5–3%. We demonstrate that the reduction seems to be driven by unconventional rather than conventional wells, and that well construction causes an added 1–2% reduction in home value.

Assessing the Influence of Property Tax Delinquency and Foreclosures on Residential Property Sales

We examine the influence of property tax delinquency on the sale price of nearby homes from 2002 to 2013 using more than 46,000 residential property sales in a representative midwestern central city—Milwaukee, Wisconsin. After controlling for a number of property and neighborhood characteristics including nearby foreclosures, we find property tax delinquency has a significant influence on nearby home sales. The relationship is negative; one additional tax delinquent property within 250 m of a home sale is associated with a discounted sale price of 0.79% or approximately $1,085 on average. In addition, the influence of tax delinquent properties on home sale prices diminishes with distance, suggesting blight is the source of the discount. Based on these findings, the negative influence of tax delinquency is likely to be exacerbated in central cities where housing density is greater and delinquency is higher and more persistent than the surrounding suburbs, which has the potential to lead to fiscal distress as property taxes are the primary revenue source for cities. As such, we suggest a two-tiered approach for cities to mitigate the negative consequences of tax delinquency: a combination of policies to eliminate delinquency and also to help homeowners become financially stable.

Wind Turbines, Amenities and Disamenitites: Astudy of Home Value Impacts in Densely Populated Massachusetts

In this study, we investigate the effect of planned or operating wind turbines on urban home values. Previous studies, which largely produced non-significant findings, focused on rural settings. We analyzed more than 122,000 home sales, between 1998 and 2012, that occurred near 41 turbines in densely populated Massachusetts communities. Although we found the effects from various negative features (such as electricity transmission lines) and positive features (such as open space) generally accorded with previous studies, we found no net effects due to turbines in these communities. We also found no unique impact on the rate of home sales near wind turbines.

Do consumers’ home buying attitudes explain the behaviour of US home sales?

ABSTRACTThis article asks whether consumers’ home buying attitudes explain the behaviour of home sales by focusing on two tranquil and two uncertain periods within 1978–2015. We utilize monthly data to formulate and estimate four augmented autoregressive models with the results indicating that improvements (deteriorations) in consumers’ home buying attitudes lead to higher (lower) home sales. This conclusion remains unchanged when controlling for economic and financial indicators often cited as determinants of home sales. Overall, our article has key implications for future studies aiming to forecast home sales using attitudinal measures.

Searching for Goldilocks: The Distance‐Based Capitalization Effects of Local Public Services

This article empirically models the effect of distance on residential property values of three different types of services, fire, police and emergency medical services. Interesting economic trade‐offs emerge as service station proximity provides both amenity and disamenity effects. Using over three million home sales from the state of Florida along with two different measures of distance, this study provides evidence of nonlinear capitalization effects on local housing values. A difference‐in‐difference model utilizing new facility construction provides corroborating evidence of these findings.

Searching for Goldilocks: The Spatial Capitalization Effects of Local Public Services

This paper empirically models the effect of distance on residential property values of three different types of services, fire, police, and emergency medical services. Interesting economic tradeoffs emerge as service station proximity provides both amenity and disamenity effects. Using an extensive database of home sales from the state of Florida along with two different measures of distance, this study provides evidence of non-linear capitalization effects on local housing values. A difference-in-difference model utilizing new facility construction provides corroborating evidence of these findings.

Housing price bubbles, new supply, and within-city dynamics

Although there is broad recognition that cities differ in their tendency to experience house price bubbles, most studies assume away any possibility of within-city heterogeneity in response to a bubble. We develop a model that suggests that this assumption may be appropriate when markets are rising but can be far from reality on the bust side of a bubble. During a housing boom, new construction and related supply adjustments by developers ensure stable relative prices between low- and high-quality segments of the housing market. On the bust side of a bubble, however, reduced housing starts allow demand-side forces and mortgage default to create pressure for relative prices to diverge across market segments. Absent a change in technology, as markets recover and new construction rebounds, relative prices should revert back to pre-crash levels. Evidence based on 2000–2013 single-family home sales in Phoenix, Arizona supports this modeling framework. Additional evidence also suggests that high rates of mortgage default contributed to divergence in relative prices when markets crashed.

Are valuations of place-based amenities driven by scale?

Amenities play an important role in explaining regional attractiveness as they increase the competition between places and the demand for housing. This paper contributes to the literature on valuations of place-based amenities by estimating hedonic prices for a differentiated set of amenities, and by examining the link between urban density and amenity valuations. The empirical analysis is based on a sample of 8319 single-family home sales observed during the period 2001–2011. Results show that amenities are valued differently depending on their size, the relationship between size and distance and neighbourhood characteristics. Differentiating among a set of nature- and culture based amenities shows that it is profoundly the value of proximity to open space that vary with neighbourhood density. Results are robust when testing for non-constant implicit prices over different time periods and novel to the literature on valuation of open spaces using the hedonic price model.

Stimulating Housing Markets

This paper studies temporary policy incentives designed to address capital overhang by inducing asset demand from buyers in the private market. Using variation across local geographies in ex ante program exposure and a difference-in-differences design, we find that the First-Time Homebuyer Credit induced a cumulative increase in home sales of at least 382 thousand, or 7.4 percent, nationally. We find little evidence of a sharp reversal of the policy response; instead, demand appears to come from several years in the future. The program likely sped the process of reallocating homes from distressed sellers to high value buyers and stabilized house prices. The response is concentrated in the existing home sales market, implying the stimulative effects of the program were less important than its role in accelerating reallocation.

The Influence of Urban Landscape Spatial Patterns on Single-Family Property Values.

Many empirical studies assessing the economic benefits of urban green space have continually documented that green space tends to increase both value and sale price of nearby residential properties. Previous studies, however, have not fully captured the quality of neighborhood level landscape spatial patterns on housing prices. To fill this literature gap, this study examined the association between landscape spatial patterns of urban green spaces and single-family home sale transactions using a spatial regression model. The research was conducted through the analysis of 11,326 housing transaction records from 2010 to 2012 in Austin, TX, USA. Variables measuring the structural, locational and neighborhood characteristics of housing were coupled with Geographic Information Systems, remote sensing and FRAGSTATS to calculate several landscape indices measuring the quality of existing landscape spatial patterns. After controlling for any spatial autocorrelation effects, we found that that larger tree and urban forest areas surrounding single-family homes positively contributed to property values, while more fragmented, isolated and irregularly shaped landscape spatial patterns resulted in the inverse. The results of this research increase awareness of the role of urban green spaces while informing community design/planning practices about the linkages between landscape spatial structure and economic benefits.

Accessibility dynamics and location premia: Do land values follow accessibility changes?

The structure of transportation networks and the patterns of accessibility they give rise to are an important determinant of land prices, and hence urban spatial structure. While there is ample evidence on the cross-sectional relationship between location and land value (usually measured from the value of improved property), there is much less evidence available on the changes in this relationship over time, especially where location is represented using a disaggregate measure of urban accessibility. This paper provides evidence of this dynamic relationship using data on home sales in the Minneapolis-St Paul, MN, USA metropolitan area, coupled with disaggregate measures of urban accessibility for multiple modes, for the period from 2000 to 2005. Our investigation tracks the effects of marginal changes in accessibility over time, as opposed to static, cross-sectional relationships, by using an approach in which the unit of observation is a ‘representative house’ for each transportation analysis zone in the region. This approach allows us to control for changes in structural attributes of houses over time, while also isolating the effect of changes in accessibility levels. Results of this approach are compared with a cross-sectional model using the same variables for a single year to illustrate important differences. Empirical estimates indicate that while most of the models estimated using a cross-sectional specification yield positive and significant effects of accessibility on sale prices, these effects disappear when the models are transformed into first-difference form. We explain these findings in light of the state of maturity of urban transportation networks.

Housing Value Estimation: An Application of Forecast Combination to Residential Property Valuation

In this study we use property-level transaction data to construct several different out-of-sample forecasts for the sales of individual homes in 10 counties in Florida. We utilize a number of common forecast combination methods and analyze the properties of their forecast errors. The results from this analysis suggest that relatively simple forecast combination schemes have the potential to reduce the error in property value estimates, possibly by a wide margin. Lastly, we find that the forecast error associated with constructing valuations using popular house price indices has been very large in our sample.

Testing the Core‐competency Model of Multi‐product Exporters

AbstractWe review the implications of the “core‐competence” model of multi‐product firms, including the “market‐size puzzle”: for most countries, the world market is much larger than the home market, while the costs of accessing foreign markets are relatively low; hence the model predicts that most domestic firms should export more of their core products than they sell domestically; yet, in practice, we do not observe this. Extending the model to allow for investment in export market penetration resolves the puzzle and Mexican data confirm its predictions: in particular, only the largest firms exhibit the dominance of exports over home sales.

School district and housing price responses to fiscal stress labels: Evidence from Ohio

This paper examines the effect of the Ohio fiscal stress labeling system on school district outcomes and housing prices. Under this policy, financially troubled districts are labeled and required to implement financial recovery plans. In response to these plans, districts increase local tax revenues and decrease capital and operating expenditures. Although these recovery plans lead to better long-term financial health for school districts, there appear to be some negative impacts on welfare in these districts during the duration of the label. I find that residential home sale prices fall following fiscal stress label receipt, but rise again once the label is removed. These districts also undergo substantial restructuring, including reductions in enrollments, teachers, and schools, which coincide with a transitory reduction in math proficiency rates following label receipt.

Home sales index prediction model based on cluster and principal component statistical approaches in a big data analytic concept

Data analysis has become one of the most important tools in various fields of engineering. HSI (Home Sales Index) has been considered one of the most crucial factors for predicting the economic trends in the construction industry. While a precise prediction of a HSI is very significant, it is limited due to the difficulty in collecting valuable information and analyzing that information properly. The several conducted studies related to a similar subject have mostly approached to the time series analysis with assumption that the HSI has been influenced with the past patterns such as seasons and historic issues. This paper mainly focused on the objective of presenting the performance of a new HSI prediction model using a big data analysis method focusing on social factors in high correlations in HSI without any those assumptions. In accordance with this research objective, this paper suggests a definite methodology for analyzing data and developing a related prediction model using cluster and principal component statistical approached focusing on comprehensive search queries on the Web. The significant results derived from the model applied to HSI prediction can be used as the initial phase of a big data analysis in the construction field in both academia and industry.

Housing Market Fluctuations and the Implicit Price of Water Quality: Empirical Evidence from a South Florida Housing Market

In this study we utilize a hedonic property price analysis to examine changes in the implicit price of water quality given housing market fluctuations over time. We analyze Martin County, Florida waterfront home sales from 2001 to 2010 accounting for the associated significant real estate fluctuations in this area through flexible econometric controls in space and time. We apply a segmented regression methodology to identify housing market price instability over time, interact water quality with these identified market segmentations, and embed these interactions within a spatial fixed effect model to further account for any spatial heterogeneity in the waterfront market. Results indicate that water quality improvement is associated with higher property values. We find no evidence that the economic downturn crowded out concern for the water quality in this area. We further impute an implicit prices of $2614, evaluated at the sample mean, for 1 % point increase in the water quality grade.

Housing Disinvestment and Crime in a Phoenix Suburb: Exploring the Differential Effects of Investors and Owner-Occupants

External investment in neighborhoods can inhibit crime. However, during the housing crisis, many investors were foreclosed upon, triggering large-scale community disinvestment. Yet the impact of this type of disinvestment on crime is currently unknown. Combining data on crime incidents with foreclosure, home sales, and sociodemographic data, this research assesses whether the foreclosure of properties owned by investors has an effect on crime in neighborhoods in Chandler, Arizona, a suburb in the heavily affected Phoenix region. Neighborhoods with a greater proportion of foreclosures on investors (FOIs) have higher total and property crime rates in the short term. In Hispanic neighborhoods, a greater proportion of FOIs result in lower rates of crime. Results suggest that neighborhood stabilization efforts should consider the role of investors in driving short-term crime rates, and that police and code enforcement strategies might prioritize neighborhoods with a high proportion of investor foreclosures.

Government-Backed Mortgage Insurance, Financial Crisis, and the Recovery from the Great Recession

The Great Recession provides an opportunity to test the proposition that government mortgage insurance programs mitigated the effects of the financial crisis and enhanced the economic recovery from 2009 to 2014. We find that government-sponsored mortgage insurance programs have been responsible for better economic outcomes in counties that participated heavily in these programs. In particular, counties with high levels of participation from government-sponsored enterprises and the Federal Housing Authority had relatively lower unemployment rates, higher home sales, higher home prices, lower mortgage delinquency rates, and less foreclosure activity, both in 2009 (soon after the peak of the financial crisis) and in 2014 (six years after the crisis) than did counties with lower levels of participation. The persistence of better outcomes in counties with heavy participation in federal government programs is consistent with a view that lower government liquidity premiums, lower government credit-risk premiums, and looser government mortgage-underwriting standards yield higher private-sector economic activity after a financial crisis.

The Effect of Listing Price Changes on the Selling Price of Single-Family Residential Homes

Sellers of unsold residential real estate usually have difficulty deciding whether to change the listing price and, if so, by how much. The purpose of this study is to determine what factors lead to listing price changes and the effect of listing price changes on the net selling price received by sellers. This study uses a sample of 13,461 single-family home sales in which 4308 had a selling price reduction during the listing period. The average original listing price for properties with one or more listing price changes is 18 % larger compared to properties where the listing price is unchanged; this difference narrows to 9.7 % when comparing final listing prices. The results indicate that the probability of a listing price reduction and the percent reduction are positively associated with house size, vacant property status, and a weak economy. A sample selection bias appears to exist for list price reduction properties, and while overpricing of properties often leads to a listing price reduction, the effect of a listing price change on the net selling price is estimated to be two to three times the given reduction in the listing price.

Property tax delinquency and its spillover effects on nearby properties

This paper investigates the impact of property tax delinquency on the sales price of nearby residential properties, an effect that we call the “delinquency discount”. We use a sample of 34,500 home sales and the population of delinquent properties for Chicago, Illinois during the period 2010 to 2013. We focus on the delinquency discount for properties within the same Census Block. We also examine the effect of delinquency duration on neighboring properties, as this measures the level of their financial distress. We estimate the magnitude of the delinquency discount using several alternative estimation methods, in each case controlling for local foreclosure activity. Our preferred method is a matching estimator, as it works to eliminate the potential for omitted variable bias that is common in this type of estimation. We find large, negative, and statistically meaningful effects of delinquent properties for which the local government has placed a tax lien and has put the lien up for sale to private investors. For properties with a tax lien that are not successfully sold, we estimate a negative spillover of 5.1% ($12,872) on surrounding properties. Properties with a tax lien that are sold to private investors have a smaller, but still negative impact on surrounding property values of 2.5% ($6310).