Three Essays on the Housing Market

Essay 1: Institutional Investment, Asset Illiquidity, and Post-Crash Housing Market Dynamics Abstract: I demonstrate that housing’s mildly segmented market structure adds an additional measure of asset illiquidity risk for owner-occupiers and their lenders by examining the effect of a house’s conversion from the owner-occupied market to the rental market. From 2012 to 2014, I find that owner-occupied houses that were purchased by institutional investors and converted to rentals after the real estate crisis sold for approximately 5% less than similar houses that sold to owner-occupiers. The large discount was in addition to REO, foreclosure, short sale, and cash purchase discounts which, when combined, highlight the low liquidation value for owner-occupied housing. Essay 2: Homeownership: An examination of its effect on house prices Abstract: Subsidizing homeownership is only justifiable if it increases homeownership attainment and creates external benefits that outweigh their costs. Using parcel-level panel data I isolate and examine the effect of homeownership on surrounding house prices. Homeownership has a causal effect on house prices, but substantial variation exists across quantiles. Changes in homeownership have a lesser (greater) effect on house prices in the upper (lower) deciles of the conditional house price distribution - despite the fact that households in the upper deciles are the primary beneficiaries of the federal tax subsidies for homeownership. Essay 3: School Quality, Latent Demand, and Bidding Wars for Houses Abstract: I examine the recent rise of bidding wars and their effectiveness relative to traditional listing strategies. A simple theoretical model predicts that underpricing a house to incite a bidding war will be most effective in housing markets with high levels of latent demand. I use school quality as a proxy for latent demand as households with children naturally want their kids to go to the best school possible. I posit that the limited supply of housing within high quality school districts creates latent demand for housing within those districts. Evidence from Atlanta supports the model - I find that underpricing a house to incite a bidding war is more effective in markets with latent demand. However, underpricing does not outperform traditional listing strategies

Accelerating Asymptotically Exact MCMC for Computationally Intensive Models via Local Approximations

We construct a new framework for accelerating Markov chain Monte Carlo in posterior sampling problems where standard methods are limited by the computational cost of the likelihood, or of numerical models embedded therein. Our approach introduces local approximations of these models into the Metropolis-Hastings kernel, borrowing ideas from deterministic approximation theory, optimization, and experimental design. Previous efforts at integrating approximate models into inference typically sacrifice either the sampler's exactness or efficiency; our work seeks to address these limitations by exploiting useful convergence characteristics of local approximations. We prove the ergodicity of our approximate Markov chain, showing that it samples asymptotically from the \emph{exact} posterior distribution of interest. We describe variations of the algorithm that employ either local polynomial approximations or local Gaussian process regressors. Our theoretical results reinforce the key observation underlying this paper: when the likelihood has some \emph{local} regularity, the number of model evaluations per MCMC step can be greatly reduced without biasing the Monte Carlo average. Numerical experiments demonstrate multiple order-of-magnitude reductions in the number of forward model evaluations used in representative ODE and PDE inference problems, with both synthetic and real data.Comment: A major update of the theory and example

Rings Over Which Cyclics are Direct Sums of Projective and CS or Noetherian

R is called a right WV -ring if each simple right R-module is injective relative to proper cyclics. If R is a right WV -ring, then R is right uniform or a right V -ring. It is shown that for a right WV-ring R, R is right noetherian if and only if each right cyclic module is a direct sum of a projective module and a CS or noetherian module. For a finitely generated module M with projective socle over a V -ring R such that every subfactor of M is a direct sum of a projective module and a CS or noetherian module, we show M = X \oplus T, where X is semisimple and T is noetherian with zero socle. In the case that M = R, we get R = S \oplus T, where S is a semisimple artinian ring, and T is a direct sum of right noetherian simple rings with zero socle. In addition, if R is a von Neumann regular ring, then it is semisimple artinian.Comment: A Para\^itre Glasgow Mathematical Journa

Agent Intermediation and Racial Price Differences

Most housing transactions are brokered wherein the buyer and seller do not meet in person. In which case the buyer’s race is not revealed to the seller, so the seller cannot discriminate based on race. Despite this observation, previous studies find racial price differentials based on the race of the buyer. We provide evidence that these estimates suffer from an omitted variable bias attributable to the time-varying attributes of the house. After controlling for the time-varying attributes of the house, we find that minority (black and Hispanic) and non-minority (white) buyers pay a similar price for comparable housing. We also examine whether agent intermediation provides a channel through which differential treatment can occur. We find no evidence of racial price differentials at the agent level

The Gut Microbiota and Mucosal T Cells

It is intuitive that immune cells in the gut may require microbiota-derived cues for their differentiation. The proximity between host and microbe in the intestine would seemingly necessitate co-adaptation. However, it has been challenging to determine the members and features of the gut microbiota that influence immune system development and function. The recent identification of immunomodulatory members of the commensal microbiota is providing insight into the dependence of select, intestinal immune cell subsets on specific microbial species. In this review, we focus on the gut microbiota's influence on the development and function of mucosal T cells subsets, specifically intraepithelial lymphocytes and lamina propria CD4 T cells

The BTC40 Survey for Quasars at 4.8 < z < 6

The BTC40 Survey for high-redshift quasars is a multicolor search using images obtained with the Big Throughput Camera (BTC) on the CTIO 4-m telescope in V, I, and z filters to search for quasars at redshifts of 4.8 < z < 6. The survey covers 40 sq. deg. in B, V, & I and 36 sq. deg. in z. Limiting magnitudes (3 sigma) reach to V = 24.6, I = 22.9 and z = 22.9. We used the (V-I) vs. (I-z) two-color diagram to select high-redshift quasar candidates from the objects classified as point sources in the imaging data. Follow-up spectroscopy with the AAT and CTIO 4-m telescopes of candidates having I < 21.5 has yielded two quasars with redshifts of z = 4.6 and z = 4.8 as well as four emission line galaxies with z = 0.6. Fainter candidates have been identified down to I = 22 for future spectroscopy on 8-m class telescopes.Comment: 27 pages, 8 figures; Accepted for publication in the Astronomical Journa

Some Remarks on Real Estate Pricing

This paper develops a framework for addressing the omitted variable bias that plagues most real estate research. We incorporate qualitative information from text to control for property attributes that are generally unobserved. The textual information is entered by real estate agents for every property sold on a Multiple Listing Service (MLS). The agents, who arguably have the most local market and property specific knowledge, use the unstructured text to highlight important information that is not clearly conveyed in other areas of the listing. Although the framework can be applied universally in real estate research, we demonstrate its effectiveness in the estimation of agent-owned sales premiums. Similar to previous studies, we find agent-owned premiums between 2% to 6% when no textual information is included. When we include the textual information the agent-owned premiums dissipate. The results suggest that the market distortions reported in Rutherford et al. [2005] and Levitt and Syverson [2008] do not exist

Quasars in the 2MASS Second Incremental Data Release

Using the 2MASS Second Incremental Data Release, we have searched for near infrared counterparts to 13214 quasars from the Veron-Cetty & Veron(2000) catalog. We have detected counterparts within 4 arcsec for 2277 of the approximately 6320 quasars within the area covered by the 2MASS Second Incremental Data Release. Only 1.6% of these are expected to be chance coincidences. Though this sample is heterogeneous, we find that known radio-loud quasars are more likely to have large near-infrared-to-optical luminosity ratios than radio-quiet quasars are, at a statistically significant level. This is consistent with dust-reddened quasars being more common in radio-selected samples than in optically-selected samples, due to stronger selection effects against dust-reddened quasars in the latter. We also find a statistically significant dearth of optically luminous quasars with large near-infrared-to-optical luminosity ratios. This can be explained in a dust obscuration model but not in a model where synchrotron emission extends from the radio into the near-infrared and creates such large ratios. We also find that selection of quasar candidates from the B-J/J-K color-color diagram, modelled on the V-J/J-K selection method of Warren, Hewett & Foltz (2000), is likely to be more sensitive to dust-obscured quasars than selection using only infrared-infrared colors.Comment: To be published in May issue of Astronomical Journal (26 pages, 8 figures, 2 tables) Replaced Figure 6 and

Does the Asset Pricing Premium Reflect Asymmetric or Incomplete Information?

We develop a framework for using text as data in asset pricing models. We use the framework to test whether real estate agents exploit their informational advantage to sell properties they own for a premium. Consistent with the previous literature, baseline estimates that exclude textual information indicate agents sell their own house at a 3 to 4 percent premium in both Phoenix, AZ and Atlanta, GA. However, this premium dissipates when textual information is included. The results suggest that the baseline estimates suffer from an omitted variable bias, which previous studies incorrectly ascribe to market distortions associated with asymmetric information