Oliver Lerbs

Explaining the Spatial Variation in Homeownership Rates: Results for German Regions

Lerbs O. W. and Oberst C. A. Explaining the spatial variation in homeownership rates: results for German regions, Regional Studies. This paper employs cross-sectional data on ninety-six German regions to investigate the interregional variability of homeownership rates. Among the explanatory variables, the analysis includes important regional housing market indicators as well as regional socio-demographic composition, urbanization and labour market performance. An estimation strategy is chosen which accounts for different forms of spatial dependence between the regional units. It is found that regional differences in the relative price of owning versus renting and the affordability of owner-occupied housing play a key role in explaining why homeownership rates vary so substantially across the country. The results indicate significant neighbourhood effects for several variables.

House prices, housing development costs, and the supply of new single-family housing in German counties and cities

This paper investigates the determinants of new single-family housing supply in local housing markets in Germany, using construction permits as the dependent variable. The empirical estimations are based on a panel data-set for 413 German counties and cities spanning the time period of 2004–2010. Employing dynamic panel data analysis, the findings suggest that the local ratio of existing home prices to housing construction costs and past local permit rates act as important drivers of new local housing investment. The average long-run price elasticity of new single-family housing supply is considerably less than one, but sizeable differences exist across the urban hierarchy.

The house price-vacancy curve

Individual sales prices and local vacancy rates in the housing market pose a natural analogy to the wage curve, a popular concept in labor economics that describes how individual wages decrease with higher local unemployment. While housing search and matching models and housing externalities strongly suggest a stable inverse relationship, there is still a lack of convincing empirical research on the sensitivity of house sales to local vacancy variation. Based on more than 10,000 single-family home transactions from the German market, this paper confirms a robust house price-vacancy curve among individual home prices and adjacent residential vacancies. The economic size of the relationship is highly comparable across all four analyzed states: a doubling of the vacancy rate at the municipality level is associated with a 5-8% discount in quality-controlled selling prices. Despite negative price signals, local vacancy distributions tend to persist over long time horizons, leaving room for policy intervention.

Ist eine makroprudenzielle Regulierung des deutschen Hypothekenmarktes geboten

Zusammenfassung Die Bundesregierung hat neue Instrumente der makroprudenziellen Regulierung für den deutschen Hypothekenmarkt geschaffen. Oliver Lerbs und Michael Voigtländer untersuchen die Notwendigkeit der Anwendung dieser Instrumente vor dem Hintergrund bestehender Finanzierungsgewohnheiten und Regulierungen. Angesichts der im internationalen Vergleich bereits als konservativ anzusehenden Ausgestaltung der Wohnimmobilienfinanzierung erscheint ein Einsatz makroprudenzieller Instrumente auf absehbare Zeit nicht erforderlich. Grundsätzlich sollten Entscheidungen hierüber regelgebunden auf Grundlage belastbarer Einzelkreditdaten erfolgen. Dafür bedarf es insgesamt eines besseren Monitorings des Immobilienfinanzierungsmarktes.

Examining Household-level Expectations on Housing Returns

In view of the dominance of housing in the average portfolio of private households, there is a striking paucity of empirical evidence concerning individual expectations on housing asset returns. Building on the well-developed literature on individual stock return expectations, e.g. Kilka and Weber (2000) or Kempf and Merkle (2014), this research aims at measuring individual expectations on housing returns. We attempt to disentangle two components of total housing returns: first, house prices rise and fall over time, giving rise to asset value gains and losses. Second, analogous to dividends for stocks, housing offers a cash flow in the form of (implicit) rents. The expectations regarding price appreciation yield and rent yield sum up to the total housing return expectations.In order to examining housing return expecations, we use the second wave of the Panel on Household Finances (PHF) conducted by the Deutsche Bundesbank. In this survey, around 4,500 German households are asked in detail about their financial situation. This includes the composition of their portfolio and questions like the rent they think to be able to charge for their own house as well as sociodemographic information.Based on households’ self-reported estimates regarding the present and future values of their own house and the implicit rental dividend on their house, we calculate total housing return expectations and analyze their cross-sectional distribution. The numerous items of the survey furthermore allow us to identify key factors influencing households’ expectations about house prices, rents and total housing returns.Total housing return expectations display a great amount of cross-sectional variation and are correlated to numerous socio-demographic characteristics, financial literacy and past experiences. Surprisingly, total housing return expectations are moderately negatively associated with the size of housing net wealth - households more heavily invested in housing tend to ask for lower returns. Homeowners who are also landlords are furthermore more pessimistic in their expectations about total housing returns and both of their components, possibly because they are more cautious and realistic due to higher experience in real estate markets. Households who constructed their main residence are also generally more pessimistic, possibly implying that they regard their house primarily as consumption good.