Karl L. Guntermann

Explaining the Variability of Apartment Rents

The research reported here uses regression analysis to analyze rent variations in a sample of apartment data from the Phoenix metropolitan area. Many of the variables used in hedonic price studies of houses are found to be significant in explaining variations in apartment rent. There are differences between hedonic studies of houses and apartments particularly with respect to common area features or amenities. The analysis of various submarkets also produced interesting results. Various uses can be made of the results of this and similar studies by appraisers (market-derived adjustments), property managers (setting rents) and feasibility analysts (the design of apartment projects). Copyright American Real Estate and Urban Economics Association.

Empirical Tests of Real Estate Market Efficiency

Recent empirical research using real estate data has supported the weak and semi-strong forms of the efficient markets hypothesis. Previous studies have not included an estimate of expected appreciation into the tests of market efficiency, thus raising a question about the reliability of the results. We first use a market model to test for market efficiency with results similar to those reported by others. We next use a dynamic multiple indicator, multiple cause (DYMIMIC) model, which extracts a vector of expected appreciation from the price data, to test market efficiency. This approach produces superior results and a stronger conclusion about the efficiency of housing markets. The results indicate limited adjustment delays which can be explained by the existence of high transactions and search costs.

The value of neighborhood schools

Abstract This paper attempts to measure both an access effect and an externality effect of neighborhood schools on the value of surrounding residential properties. While the access effect appears to dominate, an external cost effect may have been identified as well. Using the estimated value-distance function, a downward-biased estimate of the aggregate loss in value is computed assuming that the neighborhood school is closed or that busing eliminates its neighborhood character. This loss is referred to as the value of a neighborhood school.

Derivation of Cost of Capital and Equity Rates from Market Data

Use of the discounted cash flow (DCF) technique in investment and appraisal situations depends on readily available and reliable estimates of cost of capital and equity rates. Previous research on estimating equity rates and cost of capital from financial data sources is extremely limited and includes no evidence on the consistency of rates derived from alternative data sources. This paper derives estimates of equity rates and cost of capital from three alternative commonly available data sources. Estimates are derived separately for operating properties and for homebuilder/land developers on both a before- and after-corporate tax basis. The alternative data sources are found to yield consistent and reliable estimates of equity rates and cost of capital. Rates estimated from these sources are sufficiently accurate and reliable for most investment or appraisal applications. Copyright American Real Estate and Urban Economics Association.

Mobile Homes, Affordability and the Housing for Older Persons Act of 1995

Abstract The Fair Housing Act permitted an age exemption to its discrimination provisions if projects provided “significant facilities and services” that addressed the special housing needs of the elderly. Mobile home subdivisions and other types of housing for lower income households could comply with the significant facilities and services provision only through extensive reliance on volunteers and a homeowners association committed to maintaining the age exemption. Part of the motivation for maintaining the age exemption is the perception by some seniors that it is important in preserving mobile home property values. Since much of the net worth of the typical mobile home owner is in the form of home equity, they are sensitive to federal regulations relating to the age exemption. The Housing for Older Persons Act of 1995 eliminates the provision for significant facilities and services as a condition for achieving age exempted status. While this may increase the supply of housing available to seniors, the Act may have unintended consequences on some seniors and other groups. It may become more difficult to provide needed facilities and services through volunteer efforts, reducing the ability of some seniors to maintain an independent lifestyle and forcing them to seek institutional care sooner than they would desire. Families and others ineligible to live in age restricted projects may face a reduced supply of housing and higher prices.

Denying Traditional Senses: lessons about programme change

Abstract Today, faculty are being challenged to rethink their course and programme offerings, and to bring them in line with the diverse needs of a new student population. In doing so, they are continually asked to confront their ‘traditional senses’ about teaching. This paper reports the struggles of faculty to build new notions about teachings, and learning styles and strategies as they recreated the real estate programme at Arizona State University. It then draws from their experience, certain lessons about programme change.