Velma Zahirovic-Herbert

Historic Preservation and Residential Property Values: Evidence from Quantile Regression

Historic designation is increasingly used as a means to achieve both preservation and community economic development. This study considered the effects of historic designation on residential property values in Baton Rouge, Louisiana, USA. The results support the well-established notion in urban economics literature that historic preservation has a positive impact on property values. However, appreciation of property values may displace less-affluent residents of historic districts after designation takes place. The results also show that the lower-end properties gain the most value from historic preservation. Thus, it must indeed be recognised that with increasing values comes the very real possibility that displacement of neighbourhood residents can occur.

Why Do Vacant Houses Sell for Less: Holding Costs, Bargaining Power or Stigma?

This article introduces Nash bargaining into a search model to identify various channels through which vacancy affects selling price and liquidity in the resale market for houses. The model shows the various vacancy effects in the form of greater seller holding cost, lower seller bargaining power and unobserved negative attributes or stigma. We use a 20-year data series on house transactions to test for these effects in a simultaneous model of price and liquidity, using the long data series to allow for variation across market phases. The robust vacancy effects on price and liquidity across all market phases primarily reflect greater seller holding cost and diminished bargaining power. Repeatedly, vacant houses also exhibit significant stigma effects in the rising market but not in stable or declining market phases. At the same time, vacant houses enjoy stronger shopping externality effects from surrounding houses for sale than do their occupied counterparts.

Flooding and Liquidity on the Bayou: The Capitalization of Flood Risk into House Value and Ease‐of‐Sale

The existing literature focuses on how perceived flood risk affects house value. Search theory, however, implies that flood risks will be capitalized into both house price and liquidity. This article draws on search theory to develop an empirical approach for estimating flood risk capitalization into both price and selling time. The results show the mix of price and liquidity capitalization varies by level of flood risk as well as across housing market phases. Regardless of the specific capitalization pattern, the results illustrate that focusing solely on price without allowing for concomitant liquidity capitalization can yield estimates that understate the full impact of flood risk on house transactions.

Asymmetric buyer information influence on price in a homogeneous housing market

Buyers often pay different prices for almost identical houses. One possible explanation is that there are information asymmetries in housing markets. Perhaps, buyers from outside the area have higher search costs and know less about the local market relative to that of current residents. In addition, an out-of-town buyer’s price expectations could be anchored to market prices in their town of origin. This study examines the effect of buyer heterogeneity in the form of geographic location on house prices. We use a new data set to examine the non-local buyer information asymmetry and anchoring hypothesis. Using transaction data from a large development in Chengdu, China, our empirical models are estimated with relatively homogeneous units sold over a short period of time by one seller to minimise possible bias resulting from omitted variables. Our results support the hypotheses that non-local buyers pay higher prices and that high price anchoring occurs.

Housing Uncertainty and Childhood Impatience

The study demonstrates a direct link between housing uncertainty and children’s time preferences, or patience. We show that students who face housing uncertainties through mortgage foreclosures and eviction learn impatient behavior and are therefore at greater risk of making poor intertemporal choices such as dropping out of school. We find that large household size and the occurrence of an eviction significantly increases the impatience of children as measured by discount rates. At the same time, we find that living in a single-family home with both parents significantly decreases children’s discount rates and thus impatience.

Financial literacy, risky mortgages, and delinquency in the US during the financial crisis

Purpose - The purpose of this paper is to evaluate whether low financial literacy is associated with the use of risky mortgages and delinquency. Design/methodology/approach - A probit analysis is used to analyze the results of a survey of US homeowners. Findings - It was found that borrowers with low financial literacy are more likely to have a risky mortgage and be delinquent in their mortgage payments. Originality/value - The results indicate that many risky loan borrowers may be unable to evaluate the risks inherent in the mortgage, which contributes to high delinquency rates. These results suggest the need for education and caution in the use of risky mortgages.

An examination of the potential relationship between green status of multifamily properties and sale price

This study investigates whether a relationship exists among sale price and green building status for multifamily properties located in Chicago, IL; New York, NY; Portland, OR; and Seattle, WA. It is hypothesized that Leadership in Energy and Environmental Design (LEED) certification will have a positive relationship with sale price when compared to non-green multifamily properties, ceteris paribus. Data are analyzed from Chicago, New York, Portland, and Seattle, primarily because these cities contain the greatest number of green multifamily properties within the CoStar database. The sample for this project is drawn from a collection of 25 green multifamily properties and 111 non-green multifamily properties. Using multiple regression techniques to examine the sample of 136 multifamily properties, results of the study indicate that there is not a significant positive relationship between LEED certification and sale price for multifamily properties in Chicago, New York, Portland, and Seattle.

Distribution of Demand for School Quality: Evidence from Quantile Regression

Our results show that high-income families place significantly higher value on academic achievement than low-income families. High-income families are also more likely to penalize house price for non-desirable non-academic school quality. This paper uses quantile regression to examine the distribution of demand for school quality. For academic achievement, the average effects as estimated by OLS are biased toward zero due to “aggregation” of families’ willingness to pay. We take advantage of a court-ordered redistricting as a quasi-random assignment of school quality. Subdivision and school fixed-effects are used to control for unobserved characteristics.

In Search of Value: How Subdivision Names Influence House Prices and Marketing Duration

Abstract The identity of residential areas has a strong influence on consumers searching for new housing. Yet, most studies have not dealt adequately with the implications of neighborhood name and characteristics as a marketing tool. This paper investigates how subdivision names selected by residential developers in Baton Rouge, Louisiana, affected property values and time on the market. We used a 20-year data series on house transactions to estimate these effects in a simultaneous model of price and marketing duration. Results indicated that an appropriate naming strategy can provide cues for consumers, which can expedite their purchase decision making process. In addition, suitably named subdivisions can promise an experience to which a substantial number of consumers aspire, creating demand and increasing the market prices of houses in the subdivision.