Thomas M. Springer

Single-Family Housing Transactions: Seller Motivations, Price, and Marketing Time

Factors such as relocation and financial distress motivate the seller of a single-family home to facilitate sale by posting a lower list price, communicating the motivations to the marketplace, or offering sales incentives to agents. Impacts of seller motivations on selling prices and marketing times are estimated using data for single-family homes sold in Arlington, Texas, from 1991 to 1993. Results show selling price discounts for houses with sellers who are either eager, motivated, or anxious, houses with sellers who have relocated, foreclosures, and vacant houses. Only foreclosure houses show the reduced marketing time expected for properties with motivated sellers. The results further suggest that the list price is the sellers primary mechanism for selling the property. Reducing the list price fosters faster sales at the sacrifice of the selling price.

REIT Characteristics and the Sensitivity of REIT Returns

Previous research on the returns to real estate investment trusts (REITs) has considered whether REITs are systematically exposed to general stock-market risk and interest-rate risk. This study examines how the sensitivity of REIT returns to these factors may be influenced by various REIT characteristics. Using a sample of publicly traded REITs, we estimate the sensitivity of REIT returns to stock market and interest-rate changes. We then propose and implement a model for testing whether differences in asset structure, financial leverage, management strategy, and degree of specialization in the REIT portfolios are related to their sensitivity to interest rate and market risk. Our results permit us to offer some inferences about how REITs can alter their risk exposure by managing these characteristics.

Search and Liquidity in Single-Family Housing

A two-stage least squares model of housing prices is estimated with data collected from 3358 single-family home transactions. The results provide evidence for an optimal marketing period and indicate that a liquidity premium is priced in single-family home sales. Consistent with the hypothesis derived from economic search models, the model shows higher selling prices for houses having longer expected marketing periods. The model also shows a price premium for houses that sell faster than expectations. This effect supports the concept that liquidity is a value- enhancing characteristic.

The Financial Impact of Boycotts and Threats of Boycott

Abstract The impact of actual boycotts and threats of boycott on the value of target firms was analyzed using the event study methodology. The results are counter-intuitive. The value of target firms increased, on average, by 0.76% on the day that news of the boycott became public. On the other hand, the value of the target firms increased by only 0.55% on the day that information of the threat of boycott became public. However, there is no significant statistical difference between the markets reaction to actual boycott and threats of boycott. When combined, without distinction between actual boycotts and threats of boycott, the value of target firms increased, on average, by 0.66%. The results also show that the market does not react differently to whether boycotts/threats are union sponsored or non-union sponsored.

Implicit pricing across residential rental submarkets

This paper examines implicit price differences of rental housing characteristics across various property types to measure whether determinants of rents are valued in the aggregate or separately. The results show that hedonic price functions are not identical across property types, which suggests that ordinary least squares is not the appropriate estimation technique when modeling the implicit prices for an aggregate rental market. Generalized least squares estimation of a random coefficient model removes the restriction of fixed parameters imposed by OLS and allows estimation of implicit prices for rental markets containing multiple property types.

Technical efficiency and economies of scale: A non-parametric analysis of REIT operating efficiency

Abstract This study measures technical efficiency and economies of scale for real estate investment trusts (REITs) by employing data envelopment analysis (DEA), a linear-programming technique. Using data from the National Association of Real Estate Investment Trusts (NAREITs) for the years 1992–1996, we find that REITs are technically inefficient, and the inefficiencies are a result of both poor input utilization and failure to operate at constant returns to scale. With respect to scale inefficiency, most REITs are operating at increasing returns to scale, suggesting that REITs could improve performance through expansion. Moreover, we employ regression analysis to determine what characteristics influence the efficiency measures obtained. The results show that internal REIT management is positively related to all measures of efficiency. Increasing leverage is negatively related to REIT input utilization. Finally, increasing REIT diversification across property types enhances scale efficiency (SE) but reduces input usage efficiency.

The Impacts of Contract Type on Broker Performance

This paper offers a theoretical and empirical analysis of the exclusive agency and exclusive-right-to-sell contracts used in real estate brokerage. The theoretical model predicts that while both contract types will yield the same price, the exclusive agency contract will result in faster sales than the exclusive-right-to-sell contract. In the empirical model, we find that houses sold faster under the exclusive agency contract than the exclusive-right-to-sell contract. However, houses sold with exclusive agency contracts also sold at a marginally lower price. We also find a slightly greater concession from the listing price at the negotiation stage of exclusive agency listings.

Lender Forbearance: Evidence from Mortgage Delinquency Patterns

The length of time that residential mortgages remain in delinquency prior to foreclosure is examined using an Accelerated Failure Time (AFT) model and a database of 207 foreclosed conventional and Veterans Administration (VA) mortgages. The results suggest that the primary factors influencing the timing of the lenders foreclosure decision are the borrowers equity position and the erosion of that position with continuing delinquency. Borrower bankruptcy and VA guarantees also lengthen the delinquency period. Delinquency periods for fixed rate mortgages (FRM) decrease when the market interest rate increases.

The Cost Efficiency of Real Estate Investment Trusts: An Analysis with a Bayesian Stochastic Frontier Model

Using a stochastic frontier methodology that incorporates Bayesian statistics, this paper analyzes the cost efficiency of real estate investment trusts (REITs) by observing the deviations of the measured costs of individual REITs from a defined efficient cost frontier. Using 1995–1997 data, we extend the previous research in this area and measure REIT efficiency more precisely by isolating random measurement error from the overall deviations from the efficient cost frontier. We calculate the magnitude of each REITs managerial inefficiency, the industry inefficiency, and returns to scale. In addition, we assess specific characteristics of REITs for their contribution to inefficiency by calculating the odds ratio that a REIT with a specific characteristic is more efficient than a REIT with an alternative characteristic. The results show that, for the years studied, REITs are relatively cost efficient with most REITs facing increasing returns to scale. Additionally, the REITs use of debt and the REITs management style significantly affect the cost performance of REITs during the aforementioned time period. Finally, diversification across property types, as measured, does not seem to influence REIT cost efficiency.

Economies of Scale and Cost Efficiencies: A Panel-Data Stochastic-Frontier Analysis of Real Estate Investment Trusts

This paper extends the existing research on real estate investment trust (REIT) operating efficiencies. We estimate a stochastic-frontier panel-data model specifying a translog cost function, covering 1995 to 2003. The results disagree with previous research in that we find little evidence of scale economies and some evidence of scale diseconomies. Moreover, we also generally find smaller inefficiencies than those shown by other REIT studies. Contrary to previous research, the results also show that self-management of a REIT associates with more inefficiency when we measure output with assets. When we use revenue to measure output, selfmanagement associates with less inefficiency. Also contrary with previous research, higher leverage associates with more efficiency. The results further suggest that inefficiency increases over time in three of our four specifications.