Information Frictions and Housing Market Dynamics

Anenberg, Elliot

doi:10.1111/iere.12204

Cited by 72 publications

(26 citation statements)

References 46 publications

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“…We target a time on the market for retail houses of 26 weeks as in Piazzesi and Schneider (2009). This number is a bit higher than some papers that use Multiple Listing Service Data such as Anenberg (2013) and Springer (1996), likely because of imperfect adjustment for withdrawn listings and re-listings.…”

Section: Target Momentsmentioning

confidence: 99%

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How Do Foreclosures Exacerbate Housing Downturns?

McQuade

Guren

2020

The Review of Economic Studies

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This article uses a structural model to show that foreclosures played a crucial role in exacerbating the recent housing bust and to analyse foreclosure mitigation policy. We consider a dynamic search model in which foreclosures freeze the market for non-foreclosures and reduce price and sales volume by eroding lender equity, destroying the credit of potential buyers, and making buyers more selective. These effects cause price-default spirals that amplify an initial shock and help the model fit both national and cross-sectional moments better than a model without foreclosure. When calibrated to the recent bust, the model reveals that the amplification generated by foreclosures is significant: ruined credit and choosey buyers account for 25.4% of the total decline in non-distressed prices and lender losses account for an additional 22.6%. For policy, we find that principal reduction is less cost-effective than lender equity injections or introducing a single seller that holds foreclosures off the market until demand rebounds. We also show that policies that slow down the pace of foreclosures can be counterproductive.

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Section: Target Momentsmentioning

confidence: 99%

“…His estimate is that time on the market is reduced by .2135 log points or 23.7%. However, REO sales are almost never withdrawn from the market, whereas retail sales are frequently withdrawn (Anenberg, 2013). We also attempt to adjust so our number excludes extremely rundown properties that sit on the market for several years.…”

Section: Target Momentsmentioning

confidence: 99%

How Do Foreclosures Exacerbate Housing Downturns?

McQuade

Guren

2020

The Review of Economic Studies

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“…For one reason, owners tend to overestimate the value of their property (Goodman and Ittner 1992) and some might not be willing to sell a property for less than they think it is worth (Genesove and Mayer 2001). In addition, property owners tend to use past transaction prices when setting list prices, which can make transaction prices slow to adjust to changes in market conditions (Anenberg 2013, Guren 2014. Moreover, if a buyer offers less 5 than the mortgage amount, the sale cannot occur unless the lender is willing to forgive the difference between the mortgage amount and the contract price or unless the borrower can make up this difference.…”

Section: Vacancy As a Measure Of Housing Market Conditionsmentioning

confidence: 99%

Long-term vacant housing in the United States

Molloy

2016

Regional Science and Urban Economics

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Because housing is durable, the housing supply is slow to adapt to declines in demand. This paper uses long-term vacancy-defined as nonseasonal housing units that have been vacant for an unusually long period of time-to quantify the extent of excess supply in the housing market. I find that long-term vacancy is less than 2 percent of all nonseasonal housing units and accounts for only one quarter of the aggregate increase in nonseasonal vacancy from 2001 to 2011. Thus, at the national level, excess supply is considerably less extensive than indicated by traditional measures of vacancy. However, the stock of long-term vacant housing is concentrated in a small number of neighborhoods that do have appreciably high long-term vacancy rates. Some of these neighborhoods have characteristics suggesting that excess supply is related to overbuilding during the housing boom, while others have characteristics that are symptomatic of persistently weak housing demand.

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“…As these explanations are essentially theoretical, some responses are expected from those working in the field. Perhaps because of the same theoretical uncertainties, priority is usually given to global value estimation, which is often needed for taxation (Andelson, 2000).…”

Section: Introductionmentioning

confidence: 99%

Land and building separation based on Shapley values

Özdilek

2020

Palgrave Commun

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The total value apportionment between land and building components remains an international issue both in theory and in practice. There are several concepts and methods of value separation, each leading to approximate estimations and therefore to divergent opinions about their reliability. In this paper, we present an alternative method of value apportionment based on Shapley's scheme of values, well recognized in the coalitional game theory. The practicality of this method is verified using observed prices of 14,715 residential properties sold during the year 2019 over all the 27 districts in Montreal (Canada). This unique data comes with detailed information about the essential attributes of the land and the building components. The empirical results of the method presented in this work are in line with practical expectations of total and separate values, either taken case-by-case or in aggregation per district. They are indeed encouraging when compared to the results of two other independent methods (i.e., the city evaluations and the OLS predictions) for the same properties. The results are interesting not only regarding the separation of value but also in several other related aspects. For instance, land values are often close to or even higher than the building values. This shows a phenomenon of building depreciation and land value appreciation. Some districts seem to favor the quality of the building, others being influenced by the location and quality of the land. Interestingly, in contrast to what is believed in practice, a good quality parcel of land does not necessarily have a good quality building according to the results.

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Information Frictions and Housing Market Dynamics

Cited by 72 publications

References 46 publications

How Do Foreclosures Exacerbate Housing Downturns?

How Do Foreclosures Exacerbate Housing Downturns?

Long-term vacant housing in the United States

Land and building separation based on Shapley values

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