The price of ignorance:foreclosures, uninformed buyers and house prices

Uninformed buyers may pay more when purchasing complex assets, such as houses. This paper compares local house buyers who are later foreclosed with those not foreclosed for various buyer-types, namely, owner-occupier households, investor-companies, second-home buyers, and small-scale investors. Data from one of the foreclosure epicenters, Orange County, Florida, reveal that subsequent foreclosures are associated with higher prices for comparable housing at the time of purchase. The premium paid by buyers between 2000 and 2007 who experience foreclosure after 2007 is larger closer to the 2007 market peak, approaching 3 percent. We find considerable heterogeneity across buyer-types. In particular, foreclosed second-home buyers and small-scale investors systematically pay more, while investor-companies and owneroccupiers do not. The pattern is consistent with the hypothesis that the premium paid by foreclosed households reflects poor information or limited financial acumen

Vacancies and residential search in an empirical equilibrium search model

As is well known housing has a unique set of characteristics which interact to cause the operation of the housing market to be significantly different from that of other markets. On the demand side individuals have to search for vacancies and its characteristics. Due to the high dimensionality of housing considerable search costs are involved. On the supply side, complicated interactions exist in the housing market whereby frictions occur frequently. In the labour market similar behaviour has been explained with search and matching models, where vacancies and turnovers are explicitly considered. Wheaton (1990) remarks that these search and matching models from the labour market would seem particularly applicable to housing. In this paper we formulate an equilibrium search model of the housing market that deals with search and prices. We beleive that an equilibrium searchmodel could be an important step forward into the analysis of vacancies and residential search. Using this framework we formulate an empirical model for the Dutch housing market.

Residential mobility and local housing-market differences

The authors extend previous literature on variations in mobility rates across local housing markets by examining the linkage of mobility rates at the household level to the structure of local housing markets. The results suggest that residential mobility rates differ widely across local housing markets, substantiating the view that residential relocation is intimately intertwined with conditions at the local level. Local housing-market conditions also have different effects on mobility rates for renters and owner-occupiers. The results suggest that variation in residential mobility rates across housing markets can be in part explained by level of urbanization, the tenure structure, the degree of government intervention, and the size of the housing market. Remarkably, these differences in local housing markets cannot be seen to be related to housing-market features only. The results suggest that these differences can also be attributed to the behavior or attitude of households with respect to housing

The Impact of Perceived Expectations and Uncertainty on Firm Investment

This paper analyses the (differential) impact of perceived expectations and uncertainty on investment spending in small and large firms. We analyse two types of investment, viz. aggregate investment and investment in energy-saving technologies, using Dutch firm level data. The results show that expectations and uncertainty about input- and output prices and domestic demand have substantial but different effects on investment spending in firms of different sizes. Furthermore, we find evidence, at least for small firms, that there are important differences between the effects of uncertainty about input and output variable

After the Boom:Transitory and Legacy Effects of Foreclosures

Foreclosures lead to lower house prices in the short run. However, whether or not foreclosures also have long-run or legacy price effects has not been addressed extensively. Do neighborhoods with a greater number of past foreclosures exhibit long lasting house price discounts? This paper examines both transitory and legacy foreclosure price effects. We use almost 20 years of data from one of the epicenters of the foreclosure crisis: Orange County, Florida. We measure the number of recent and past foreclosures within narrowly defined neighborhoods for each house sold during 2016–2019:Q2. We compare transaction prices with different numbers of recent and past foreclosures, while controlling for differences in observed property characteristics and taking measures to reduce the impact of unobserved heterogeneity. We find that greater numbers of recent and past foreclosures are associated with lower house prices. We find strong transitory effects consistent with the existing literature. We also find significant but modest legacy effects on surrounding prices. These long-run discounts are about 0.41 percent to 0.79 percent in Orange County, Florida.</p

Foreclosures and housing prices:does neighborhood configuration matter?

This paper measures the extent to which effects of foreclosures vary across neighborhoods. It offers a simple empirical framework for decomposing the spillover effects on neighboring property prices. Data from Orange County, Florida, reveal that the effects systematically vary across neighborhoods by morphology. The results indicate that older, homogeneous age structure, and non-gated neighborhoods with high vacancy rates are most in jeopardy when foreclosures are present, as these neighborhoods show the greatest neighborhood house price effects.</p

Housing Consumption and Young Households Residential Moves

The paper examines the impact of contextual factors on young households residential moves. By dealing with young households moves over a limited period of time enables us to show how differences in contextual factors determine differences in young households residential mobility rates. A housing search model is outlined to explain housing consumption and mobility choices of young households. In the empirical analysis a multi-spell mixed proportional hazard model is estimated on young households. Estimation results indicate that housing choices are set in a local housing and labor market context, affecting housing careers of young households mostly likely persisting through later stages in the life course. Differences in residential mobility rates are furthermore associated with synchronized changes in household composition, indicating the importance of the household demographics in housing market phenomena.Household behavior; Residential mobility; Housing markets

After the Boom: Transitory and Legacy Effects of Foreclosures

Foreclosures lead to lower house prices in the short run. However, whether or not foreclosures also have long-run or legacy price effects has not been addressed extensively. Do neighborhoods with a greater number of past foreclosures exhibit long lasting house price discounts? This paper examines both transitory and legacy foreclosure price effects. We use almost 20 years of data from one of the epicenters of the foreclosure crisis: Orange County, Florida. We measure the number of recent and past foreclosures within narrowly defined neighborhoods for each house sold during 2016–2019:Q2. We compare transaction prices with different numbers of recent and past foreclosures, while controlling for differences in observed property characteristics and taking measures to reduce the impact of unobserved heterogeneity. We find that greater numbers of recent and past foreclosures are associated with lower house prices. We find strong transitory effects consistent with the existing literature. We also find significant but modest legacy effects on surrounding prices. These long-run discounts are about 0.41 percent to 0.79 percent in Orange County, Florida

European Metropolitan Commercial Real Estate Markets

XVIII, 332 p. 150 illus., 44 illus. in color.onli