Canadian / U.S. Exchange Rates and Nonresident Investors: Their Influence on Residential Property Values

Factors external to a home’s characteristics may influence the sales price. This analysis focuses on Bellingham, Washington, because of several influences including the Canadian economy and nonresidents. First estimated is a constant-quality Bellingham housing price index, which is used as the dependent variable in a reduced-form model of market price to estimate the impact of the exchange rate. The analysis (1984-94) suggests that a 10% rise in the exchange rate leads to a 7.7% rise in Bellingham home prices. Additionally, in 1990, non-county buyers paid 4% to 6% more than county residents and non-county sellers received 6% to 8% less.

Factors Affecting Residential Property Development Patterns

The pattern of residential development within the context of metropolitan growth and development has been the subject of an extensive literature. Among the streams of literature have been monocentric and policentric models, rent gradients and population density, and spatial mismatch and jobs/housing balance. Less explored have been the factors determining the specific location of development from within a larger set of suitable locations. This paper uses a disaggregated data set, county property appraiser data, to track the number of new single-family housing units built in each section (square mile) of Alachua County, Florida by the year built over a twenty- year period. The paper explores the role of transportation, large-scale development, employment nodes, existing patterns of development, and regulation on the spatial pattern of development. As discussions turn to smart growth, compact development, and the alleviation of sprawl, it is important to understand the forces that contribute to observed development patterns.

Environmental Determinants of Housing Prices: The Impact of Flood Zone Status

This study examines the valuation of homes located within 100-year flood plains. Utilizing a database of 29,887 property transactions in Alachua County, Florida, the results of this investigation suggest that comparable characteristic homes located within a flood zone sell, on average, for less than homes located outside flood zones. Interestingly, the price differential is less than the present value of future flood insurance premiums. In addition, the price differential is shown to have increased since passage of the National Flood Insurance Reform Act of 1994. Finally, it appears that property tax assessors have slightly over-assessed properties located in flood zones relative to those in other areas. The large database and the lengthy period of analysis (1980–1997) are much broader than that of previous research efforts.

The Florida Catastrophic Storm Risk Management Center The Capitalization of Homeowners Insurance Premiums in House Prices THE CAPITALIZATION OF HOMEOWNERS INSURANCE PREMIUMS IN HOUSE PRICES THE CAPITALIZATION OF HOMEOWNERS INSURANCE PREMIUMS IN HOUSE PRIC

Executive Summary The primary questions of interest in this study are whether and, if so to what extent, changes in homeowners insurance premiums affect real estate prices. As a cost of owning a home, homeowners insurance would have an impact on the homeownership decision, but in normal times one would expect the impact to be marginal. However, during a period of high insurance costs or rapidly increasing premiums, these costs would likely have a stronger effect on housing demand and the capitalization of these higher costs into house prices could create a downward pressure on prices. The supply of housing could also be affected as homeowners find the increasing ownership costs a hardship or unbearable and decide to terminate ownership. As such, higher insurance costs could have a significant impact by both reducing the demand and increasing the supply of housing. with adjustable-rate mortgages, which had become popular in the early-mid 2000s, experienced increasing contract rates and payments as these loans reset. Borrowers with interest-only adjustable-rate loans, which had also become more popular over the last several years, saw an even more dramatic increase as payments became amortizing. Second, the dramatic increase in property values in the early-mid 2000s led to continual increases in property taxes as property assessments increased. Insurance provided the third, and in some cases, most visible evidence of increasing homeownership costs. A doubling of premiums was not uncommon in areas of the state that had the highest natural disaster risk exposure. Many highly leveraged homeowners had little or no additional income to offset these increasing costs and were forced to consider selling their properties. Simultaneously, however, demand for real estate was decreasing as prospective buyers factored these additional costs into the prices they were willing to pay. The size and price volatility of the Florida housing market over the 2004-2009 time period in conjunction with the shock losses that the property insurance market sustained over this period provide an excellent setting in which to examine the relationship between a significant housing cost factor (homeowner's insurance) and the demand for residential real estate. Given that property taxes are a main revenue source for many states and local jurisdictions and given that property tax collections are based on property values that can be affected by factors such as changes in insurance costs, it is important to better understand the cost factors that ultimately have a significant impact on the demand for real estate and real estate prices. A better understanding of these relationships can provide for more effective public policy decisions regarding insurance pricing and regulation of the insurance industry in general. This study examines the extent to which changes in homeowners insurance premiums affect the demand for housing. Previous research, using primarily floodplain data, has shown that increased insurance costs are negatively capitalized into house prices. This study used Miami-Dade County home sales and Citizens Property Insurance Corporation data for the period 2004 through 2009 to measure the capitalization effect of increases in premiums on house prices. Using a hedonic pricing model and measures of changes in homeowners insurance premiums over one-, two-and three-period segments prior to the sale of the property, the results showed that increases in premiums are negatively capitalized in prices. In the data used in this study, homeowners spent an average of $2,145 per year for property insurance. The changes in insurance premiums during the time period were dramatic: the one-, two-, and three-year decreased the average house price by$13,484.62. These changes in the average house price produce implied cap rates of 11.53%, 8.92%, and 11.55%, respectively for the one-, two-, and three-year premium increases. THE CAPITALIZATION OF HOMEOWNERS INSURANCE PREMIUMS IN HOUSE PRICES Abstract This study examines the impact of changes in property insurance premiums on house prices. Previous research, using primarily floodplain data, has shown that increased insurance costs are negatively capitalized into house prices. This study uses Miami-Dade County home sales and Citizens Property Insurance Corporation data for the period 2004 through 2009 to measure the capitalization effect of increases in premiums on house prices. Using a hedonic pricing model and measures of changes in homeowners insurance premiums over one-, two-and three-period segments prior to the sale of the property, the results show that increases in premiums are negatively capitalized in prices

The Capitalization of Building Codes in House Prices

Building code, Safety, Housing prices, Catastrophic risk, Hedonic pricing model,