27,020 research outputs found

    The Predictability of REIT Returns and Market Segmentatio

    Get PDF
    Recent research suggests that real estate returns are more predictable than the returns of other assets and that the real estate market is segmented from the general stock market. This study examines these two issues empirically using a multifactor asset pricing model that allows for time-varying risk premiums. The results indicate that, in a general two-factor asset pricing framework, the REIT market is integrated with the general stock market. Furthermore, no evidence can be found that REIT returns are more predictable than the returns of other stocks.

    Residential Appraisal and the Lending Process: A Survey of Issues

    Get PDF
    This article surveys mainly academic literature for issues concerning the use of appraisals in the residential lending process. The development of appraisal methodologies is reviewed, and the strengths and weaknesses of various appraisal techniques are assessed. Issues relating to the use of neighborhood characteristics in appraisals for lending purposes are also explored. Finally, institutional incentives that give rise to biased and self-serving appraisals and possible solutions to these incentive problems are examined.

    Pricing Factors in Real Estate Markets: A Simple Preference Based Approach

    Get PDF
    Conventional wisdom tells us that the price level of properties should be supported by the rent they receive. This paper examines the pricing factors of properties by analyzing how individuals allocate their income to housing consumption and other goods, which in turn become the rent (or implicit rent) to support property values. Our model’s results can explain several puzzling observations in property markets, including why the variance of property appreciation rates is much higher than that of income growth rates in the same area.Preference-based model, pricing factors, property appreciation, property markets

    A Rational Explanation for Boom-and-Bust Price Patterns in Real Estate Markets

    Get PDF
    This paper develops a stylized model to provide a rational explanation for the boom-and-bust price movement pattern that we frequently observe in the real world. Our stylized model indicates that there are three conditions to form a boom-and-bust price pattern in a community: a move-in of high income residents, wide income gap between new and existing residents, and supply process that leads to an inventory buildup. It seems that, based on these three conditions, China is more likely to experience a boom-and-bust price movement pattern than a developed country with a more mature and less vibrant economy.Real Estate Cycles; Boom-and-Bust; Supply Decision; Moving Costs

    Are Real Estate IPOs a Different Species? Evidence from Hong Kong IPOs

    Get PDF
    It is well documented that in the United States, real estate investment trust (REIT) initial public offerings (IPOs) have an abnormally low initial-day return when compared to that of industrial firm IPOs. Researchers suspect that the abnormal return pattern of REIT IPOs is caused by their unique real estate holdings. Examination of 399 IPOs issued in Hong Kong during the 1986-1997 period reveals strong evidence that suggests that underlying real estate holdings cannot be the sole reason for the observed low initial-day return of REIT IPOs. This investigation indicates that there is a need to re-think the current explanations for the abnormal performance of REIT IPOs.

    Institutional Investment in REITs: Evidence and Implications

    Get PDF
    It has been documented that institutional investors did not participate actively in the real estate investment trust (REIT) stock market prior to 1990 and that the percentage of institutional holdings of a REIT stock is positively correlated with the performance of the REIT stock. This article documents a reversal in trend in institutional investors’ preference for investing in REIT stocks and in other stocks. The study shows that prior to 1990, institutional investors invested more of their funds in other stocks than in REITs, whereas after 1990 they invest more of their funds in REITs than in other stocks in the market. The strategies of institutional investors investing in REITs are also analyzed. The findings of the study have implications for the agency and corporate control issues prevailing in the REIT stock market.