Research
Housing Prices
Housing Prices and Behaviorial Traits
| "Listing Behaviors and Housing Market Outcomes" | |
| Date | April 2011 |
| Subject | Housing Prices |
| Keywords | Listing Price, Listing Strategies, Foreclosure |
| Abstract | Prior literatures on negotiations and auction behavior have both addressed the relationship between initial asking prices and the final sale price of a commodity. However, the recommendations of these two literatures come into direct conflict in the context of a home sale, which possesses features of both an auction and a negotiation. This project explores the relationship between the listing price and the sale price of a property, studying more than 14,000 single-family home sales in NJ, PA and DE listed through the Multiple Listing Service between January 2005 and April 2009. We find that the common industrial practice of under-pricing in fact relates to less favorable outcomes, especially in troubled zip codes with higher rates of mortgage foreclosure or serious delinquency. Relatively high listing prices lead to higher sale prices, lending support to an anchoring interpretation. Our analysis controls for the impact of time-on-market and unobserved housing qualities explicitly. |
| "The Anatomy of a Housing Bubble" | |
| Date | April 2011 (Under Review) |
| Subject | Housing Prices |
| Keywords | Housing prices; Housing bubbles; Media; Politics |
| Abstract | This paper investigates a potential housing bubble in Hong Kong in the 1990s. A within-city analysis is performed using a monthly panel data set on 324 large-scale housing complexes (estates) located in 17 out of 18 districts in Hong Kong. The empirical analysis focuses on crosssectional variations in home prices each month during the bubble and controls for housing price fundamentals using district-month fixed effects. I find evidence consistent with an overconfidence-driven speculation bubble. The same analysis is performed using a placebo period prior to the price upswing and no similar patterns are found. I propose media coverage and political uncertainties as potential causes of the bubble. |
| "Taking Stock of Housing Wealth: Reported Home Values (with Talya Miron-Shatz)" | |
| Date | July 2010 |
| Subject | Housing Prices |
| Keywords | Housing price prediction; Reported home values |
| Abstract | For most homeowners, the house is not only the most important consumption good but also the dominant asset. A subjective assessment of home value is an inherent component of many household decisions, including portfolio choice, retirement planning and borrowing practices. The US Government, through surveys including the US census, the American Household Survey, Current Population Survey and the Health and Retirement Survey, uses a subjective, self-reported home value as a means of mapping out American wealth. Current research treats the self-reported home price as an objective and uncontested measure of home value, although there has been no evidence concerning its validity. We show that reported home prices do have an effect on home sale behaviors and outcomes in an experimental setting. However, we propose that reported home values vary from market values in a systematic fashion. Survey data show that a higher status, in terms of household income, neighborhood home value, or self-reported health status, is associated with a greater gap between the self-reported home value and one’s home worth. This has important implications for understanding existing literature and for future research. |
| "Has Sars Infected the Housing Market? Evidence from Hong Kong." | |
| Date | January 2008 |
| Publication | Journal of Urban Economics |
| Subject | Housing Prices |
| Keywords | SARS; Housing prices; Overreaction; Shocks; Epidemics |
| Citation | Wong, Grace, "Has SARS Infected the Property Market? Evidence from Hong Kong". Journal of Urban Economics, Vol. 63, pp. 74-95, 2008 |
| Abstract | This paper uses the 2003 Hong Kong Severe Acute Respiratory Syndrome (SARS) epidemic as a natural experiment to investigate how housing markets react to extreme events. An analysis of transaction volume suggests that the absence of price overreaction is likely to be related to housing market characteristics, including transaction costs, credit constraints and loss aversion. |
| "What Is a Tree Worth? Green-city Strategies and Housing Prices." (with Susan Wachter) | |
| Date | April 2007 |
| Publication | Real Estate Economics |
| Subject | Housing and Environment |
| Keywords | Housing price; Social capital; Signaling; Tree planting |
| Citation | Wachter, Susan M. and Wong, Grace, "What is a Tree Worth? Green-City Strategies and Housing Prices". Real Estate Economics, Vol. 36, No. 2, 2008 |
| Abstract | We investigate the correlation between curb-side tree plantings and housing price movements in Philadelphia from 1998 to 2003, comparing two programs, one by the Philadelphia Horticultural Society that requires block-group effort that focuses on low-income neighbourhoods and the other by the Fairmount Park Commission that is individual-based without specific target areas. A 7 to 11 percent price differential is identified within 4000ft of the Fairmount tree plantings. We argue that this is largely driven by either social capital creation or a signaling mechanism, on the top of an intrinsic tree value (around 2 percent). Findings using the PHS tree program suggest that development of social capital or environmentally-conscious behavior might be a less important channel. Any positive changes brought by the PHS tree plantings were not detected with sufficient statistical power. |
| "A Comparison of International Residential Housing Risk Premia" (with Chris Julliard) | |
| Date | June 2006 |
| Subject | Housing Prices; Housing Risk Premium |
| Keywords | International housing markets; Housing risk premium; politics; zoning |
| Abstract | This paper contributes to this debate on the substantial risk-adjusted returns to real estate by first constructing a panel of housing risk premia for 13 OECD countries over a long sample period (1966:Q3 to 2004:Q4), and then exploring the relationship of these risk premia to changes in the financial market depth, equity market activities, property tax system, urbanization, zoning regulations and political orientation of the government. By comparing the experiences of housing markets in various developed countries, this paper adds to our understanding of what constitutes the real estate risk premium. |