Dag Einar Sommervoll

Rising inequality of housing? : evidence from segmented housing price indices

This article uses the Case‐Shiller technique for constructing house price indices on a Norwegian data set of transactions for the period 1991–2002 comprising 10,376 pairs of repeated sales. Using weighted least squares to control for heteroskedasticity, we construct a general house price index by regressing differences in log prices for the subset of repeated sales of identical homes onto a set of dummy time variables, one for each quarter in the period studied. The index thus constructed shows that, in general, nominal prices for identical homes have increased by a factor of 3.58 over the 11‐year period, while the consumer price index increased by 1.28, creating substantial capital returns for early purchasers. Considerable differences were also found in the appreciation in submarkets defined by dwelling size. This article argues that asset appreciation and differences in asset appreciation have important policy ramifications and represent challenges for policymakers and the general populace.

Driven to drink: Sin taxes near a border

This paper investigates household purchasing behavior in response to differing alcohol and tobacco taxes near an international border. Our study suggests that large tax differentials near borders induce economically important tax avoidance behavior, which may limit a governments ability to raise revenue and potentially undermine important health and social policy goals. We match novel supermarket scanner and consumer expenditure data to measure the size and scope of the effect for households and stores. We find that stores near/far from the international border have statistically significantly lower/higher sales of beer and tobacco than comparable stores far/near the border. Moreover, we find that households near the border report higher consumption of these same goods. This is consistent with households facing lower prices. Finally, we find measures of externalities associated with these goods are higher near the border.

Isolated rational curves on K3-fibered Calabi–Yau threefolds

Abstract:In this paper we study 16 complete intersection K3-fibered Calabi--Yau variety types in biprojective space ℙn1}×ℙ1. These are all the CICY-types that are K3 fibered by the projection on the second factor. We prove existence of isolated rational curves of bidegree (d,0) for every positive integer d on a general Calabi–Yau variety of these types. The proof depends heavily on existence theorems for curves on K3-surfaces proved by S. Mori and K. Oguiso. Some of these varieties are related to Calabi–Yau varieties in projective space by a determinantal contraction, and we use this to prove existence of rational curves of every degree for a general Calabi–Yau variety in projective space.

Thick‐Market Effects, Housing Heterogeneity, and the Determinants of Transaction Seasonality

This article uses cross‐sectional variation in transaction seasonality and a search‐theoretic framework to develop a test for thick‐market effects from matching efficiency. The test relates the extent of transaction seasonality to the degree of horizontal housing heterogeneity. We find a strong positive association between measures of seasonality and housing heterogeneity using a transaction level dataset for Norway, which is consistent with the presence of thick‐market effects. These results also show that the degree of horizontal heterogeneity of the housing stock is an important determinant of the extent of seasonality in a housing market.

Housing Careers, Price–Rent Ratios and Rental Equivalence

Abstract This paper analyses price–rent (PR) ratios under different housing career structures. A housing market with three segments for owner-occupation and a segment with rental housing is applied. A housing career is characterized by how households move between rentals and owner-occupied housing. While rents are completely passed through to the house price index when rentals represent alternative housing to all forms of owner-occupation, non-constant PR ratios are derived from more realistic housing career structures. In the presence of equity induced up-trading housing markets dominated by family homes are likely to see short-term deviations in PR ratios exceeding those of housing markets dominated by starter homes.

Do Urban House Prices Converge

We investigate two aspects of housing market price dynamics. Firstly, whether the spatial pattern of house prices in a metropolitan housing market converge or diverge over time and secondly, whether suburbs with relatively low (high) house prices 20 years ago continue to occupy the same relative position in the house price distribution. The empirical work uses a property transaction database for Melbourne to examine the changing distribution of suburban house prices over a nearly 20-year period (1990–2009) that spans two housing cycles. We focus on convergence measures that use Melbourne submarket-based repeat sale house price indexes as a unit of measurement. We find that house prices diverge, and so the gap between low-priced submarkets and high-priced submarkets is increasing. A second key result is that low-priced submarkets typically remain at the low end of the house price distribution, because their rates of appreciation fall short of those at the upper end of the house price distribution. The geography of house price dynamics suggests that the price gradient with respect to distance from the central business district is becoming steeper.

Homes and Castles: Should We Care about Idiosyncratic Risk?

We consider a novel set of data comprising every transaction in the Netherlands’ housing market between 1995 and 2011, and take a closer look at the idiosyncratic risk as it played out in those years. Shiller and Weiss (1999) proposed a home equity insurance policy that eliminates systematic risk. We use their insurance scheme as an analytical tool to add detail to the comovement of individual transactions and the market. We are particularly interested in the policy’s loss coverage, efficiency, and payout probability. At best, protection against market risk is only around the half-way mark to risk elimination. (JEL R31, R38)

Discrimination in Housing Markets

Discrimination in housing markets can take various forms. Unequal treatment based on ethnicity, for example, is likely to increase search and transaction costs for certain groups in the rental and owner-occupier markets. As homeowners tend to be less heavily taxed than renters and most homes are financed with a mortgage, unequal treatment in the mortgage market may seriously restrict access to homeownership. Discrimination can be rooted in objective differences across groups, or reflect bigotry. Whatever the cause, discrimination violates international laws and is a source of unequal opportunity.