Forrest E. Huffman

The adverse impacts of local historic designation: The case of small apartment buildings in Philadelphia

This paper examines the sales effects of local historic preservation. Using the hedonic framework our study shows that small historic apartment buildings experienced a 24% reduction in price compared to nonlocally certified properties. Our variable for federal historic districts, however, produced statistically insignificant results. The results suggest that historic control (as practiced in Philadelphia) is confiscatory. The study illustrates an outcome of public regulation that impinges on private property rights.

Who bears the burden of development impact fees? ( USA)

Abstract We theorize how the real estate market will respond to development impact fees. We look at the effects of impact fees on residential and nonresidential real estate under different supply and demand relationships and in the short term and long term. We examine prices that developers, homebuyers, and landowners pay or receive. We also explore how impact fees affect the distribution of development among communities in metropolitan areas. We conclude, on the whole, that neither developers nor landowners will bear the major burden of paying impact fees. Rather, consumers—homebuyers, renters, or nonresidential tenants—will pay the major share of development impact fees in the long term.

Price concessions, time on the market, and the actual sale price of homes

This article examines the relationships between listing price concessions, time on the market, and the actual sale price of homes. The principal hypothesis that significant listing price concessions, usually the result of overpricing, can lead to real discounts on the final sale price is proven by our empirical results. We also found that the longer the time on the market, the higher the sale price, ceteris paribus. This finding is consistent with the theory that the longer a property remains on the market, the higher the probability is that a relatively superior selling price can be realized.

Zoning and Industrial Land Values: The Case of Philadelphia

This paper examines the market effects of zoning. Using the hedonic framework, we perform an empirical analysis that shows that lots zoned for industrial use in our study area are associated with a 58% price discount. The paper highlights the outcome of static zoning policies in a dynamic world. As the demand for industrial land in Philadelphia declined (resulting in vacancies), prices fell, but zoning was slow to adjust, therefore land conversion did not occur to re-equilibrate. Copyright American Real Estate and Urban Economics Association.

The Price Effects of Cash versus Mortgage Transactions

This paper investigates the price effects of cash versus mortgage transactions. Our hypothesis that home sales involving all-cash transactions will sell at discount is borne out by the results of this study. Analyzing a sample of comparable row home dwelling units, we find that all-cash transactions are associated with roughly a 13% price discount relative to transactions involving financing terms that are typical of the market. Cash is King. The findings are consistent with theories regarding buyer-seller behavior. Copyright American Real Estate and Urban Economics Association.

Contract expiration and sales price

This article represents the first empirical attempt to detect the relationship between sales price and listing (or contract) period. Specifically, we examine the relationship between sales price and contract expiration days. Our hypothesized positive relationship between sales price and contract expiration days is borne out by the results of this study. These results show that the home seller is able to exact a price premium of 0.04% per contract day that he/she is able to preserve. Alternatively stated, he/she will concede a price discount of 0.04% per day, on average, as the sales contract approaches its expiration. Simple analyses of time on the market (TOM) without controlling for listing period may yield misleading signals.

The Impact of Settlement Period on Sales Price

This study is an empirical investigation of the impact of “settlement period” on sales price while controlling for “marketing period” and standard explanatory variables. The hypothesized positive relationship between “settlement period” and sales price is confirmed by the results of this study. The estimated coefficient on “settlement period” is 0.0008 meaning that our market, on average, exacts a premium of 0.08 percent per day of “settlement period” beyond a “norm” of 60 days. The estimated coefficient on “marketing period” (a control variable) is −0.0003 meaning that our market, on average, requires a discount of 0.03 percent per day of “marketing period.” Our findings show the relative importance of “settlement period” in making real estate pricing decisions.

Corporate real estate risk management and assessment

This paper analyses the inherent risks associated with corporate real estate (CRE). First, the author looks at corporate risk in general and at the context in which CRE decisions are made. Next, the types of risk generally inherent in CRE usage are examined, beginning with development risks and then grouping other risks into three categories: financial, physical and regulatory CRE risks. Possible risk management strategies are offered, to reduce the risks associated with CRE usage: due diligence, avoidance, insurance, hedging and diversification. Lastly, conclusions and recommendations for accounting for risk in corporate real estate management (CREM) are provided. The discussion of the risks inherent in CRE usage offers a starting point for future and more detailed discussions of the risk in CREM and provides a new perspective on the management of CRE assets.

Price Determinants of Foreclosed Urban Land

Foreclosure proceedings are the primary cause of real-estate auction sales in the US. Given the added legal constraints and risk associated with foreclosure proceedings, it is an empirical question as to whether the resulting prices are a function of the usual underlying factors of physical characteristics, locational benefits and neighbourhood effects which motivate normal market sale pricing. Using a hedonic pricing model common in the analysis of market sale prices, we find systematically determined price behaviour which replicates market pricing

Toward the Development of an Urban Growth Model that Recognizes the Importance of the Basic Nature of Services

This exploratory research examines selected service sectors of a defined local economy. Using export base theory, preliminary models linking these services sectors to exogenous influences are developed. These models are found to be statistically diverse. Further model-building efforts should recognize the heterogeneous nature of services through disaggregation of services sectors and a thorough consideration of potential exogenous variables. Copyright American Real Estate and Urban Economics Association.