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Posts Tagged ‘real estate’

A View for All

A student says his family owns some property in rural East Texas.  The property on a hilltop next to it overlooks my student’s pond.  His neighbor says he really enjoys sitting on his porch watching the sunset over the pond.  The student’s family doesn’t benefit from the pond’s positive externality — they have no view at all. 

His father, who was annoyed by the neighbor’s bragging, decided to stop trimming the bushes around the pond. Soon, the neighbor called up and offered to maintain the property — trim the bushes and keep the pond free of rubbish.  A clever ploy by his father to force the neighbor to internalize the externality — although I wonder whether this induced behavior represented a stable equilibrium.  (HT: SF)


“Gayborhoods” and Heat Waves at This Year’s AEA Meetings

Jon Hilsenrath of The Wall Street Journal reports on the most offbeat papers of this year’s American Economic Association meetings.   One of our favorites — in light of our recent “Are Gay Men Really Rich?” podcast — is this one:

FIND A NEW “GAYBORHOOD” FOR BETTER HOUSING RETURNS

Janice Madden of the University of Pennsylvania and Matthew Ruther of the University of Colorado studied census tract data and the American Community Survey to examine the locations of gay male and lesbian partnerships in 38 large U.S. cities. They found that census tracts that start the decade with more gay men experienced significantly greater growth in household incomes and, in the Northeast and West, also greater population growth over the next decade than those census tracts with fewer gay men. Census tracts with more lesbians at the start of the decade saw no difference in population or income growth.

Another favorite examines the long-term outcomes of children conceived during heat waves.


What Will Robots Do to Property Values?

Our podcast this week is all about driving. Last spring, we had a podcast on driverless vehicles that heavily focused on its likely positive safety impacts. Over at Economix, economist Casey Mulligan explores another likely effect of both driverless cars and the drone delivery services that Amazon is experimenting with:  property values increase in urban centers.  Here’s Mulligan’s theory:

As technology helps with moving goods and people more cheaply, it might seem that urban real estate would give up some of its price premium because distance becomes less of an obstacle to economic transactions. Wouldn’t a driverless car cause some workers to sell their Manhattan apartments and commute to their jobs from more spacious homes in the suburbs or even rural New York State?


Want to Jump-Start the Housing Market? Get Rid of the Realtors!

Okay, okay, that’s not quite the message of a new working paper by Panle Jia Barwick and Parag A. Pathak called “The Costs of Free Entry: An Empirical Study of Real Estate Agents in Greater Boston.” But for those of us who have thought about the Realtor’s role in the housing market, it’s tempting to jump to that conclusion. Here’s the full version of the study, and here’s the abstract:

This paper studies the real estate brokerage industry in Greater Boston, an industry with low entry barriers and substantial turnover. Using a comprehensive dataset of agents and transactions from 1998-2007, we find that entry does not increase sales probabilities or reduce the time it takes for properties to sell, decreases the market share of experienced agents, and leads to a reduction in average service quality. These empirical patterns motivate an econometric model of the dynamic optimizing behavior of agents that serves as the foundation for simulating counterfactual market structures. A one-half reduction in the commission rate leads to a 73% increase in the number of houses each agent sells and benefits consumers by about $2 billion. House price appreciation in the first half of the 2000s accounts for 24% of overall entry and a 31% decline in the number of houses sold by each agent. Low cost programs that provide information about past agent performance have the potential to increase overall productivity and generate significant social savings.


Truth in Advertising

By jingo, what a boom it was! So much so that I just noticed a local Philly contractor, perhaps more honest than most, who named his business “Bubble Builders.” In a sign of the times, I haven’t seen a single customer enter over the past few months.
With the housing bubble now truly behind us, you might imagine that Bubble Builders either needs a new name or a new line of business. What would you recommend?


Zillow Says Real-Estate Market Not as Bad as It Looks

Newspaper headlines earlier this week reported a dramatic 19 percent decline in housing prices based on the Case-Shiller index of real-estate prices. Stan Humphries, writing on the Zillow blog, notes that Zillow’s price index didn’t fall as much as Case-Shiller. The difference is that Zillow’s index does not include foreclosures, but Case-Shiller does. Humphries notes that a staggering percentage of . . .


Our Daily Bleg: A Real-Estate Dilemma

Mike, a 30-year-old engineer, writes in with a real-estate dilemma in which he’s considering a tricky tradeoff: is it worth sabotaging his own credit rating in order to walk away from a house that’s worth far less than his mortgage? Already Been Blegged Here’s what Freakonomics readers have been blegging for lately. How to Handicap a Multi-Race Challenge? Book-Club Questions . . .


Economist Price Fishback: The Real Facts About the Original Home Owners’ Loan Corporation (and What They Mean for a Modern Incarnation)

More and more people are calling for the government to create a Home Owners’ Loan Corporation (HOLC) modeled after the New Deal version that went by the same name. The first person I heard suggesting this was economist Alan Blinder in a startlingly prescient New York Times Op-Ed piece back in February of this year. More recently, Hillary Clinton has . . .


Diamond and Kashyap on the Recent Financial Upheavals

As an economist, I am supposed to have something intelligent to say about the current financial crisis. To be honest, however, I haven’t got the foggiest idea what this all means. So I did what I always do when something related to banking arises: I knocked on the doors of my colleagues Doug Diamond and Anil Kashyap, and asked them . . .


Love Data? Zillow Wants You

We’ve blogged a few times about Zillow (here and here), a website that is trying to shake up the real estate industry. I’ve made radical predictions about the future of the real estate industry. I’m hoping that Zillow will help make those prophesies come true. So to do my part (and because I am as susceptible to flattery as the . . .


Space Bubble Real Estate

Lots of people want to buy property in outer-space, argues blogger Glenn Reynolds. He points to customers of Lunar Embassy who pay $16 or $20 for novelty acres on the moon. But to go from gimmicky certificates to serious lunar (and Martian) real estate development takes a serious economic incentive — like the concept of “land claims recognition legislation,” as . . .


Is the Housing Crisis a Public Health Nuisance?

Public-health officials in northern California are worried that foreclosed and abandoned homes — at least the ones with swimming pools — might become a breeding ground for mosquitoes that could carry West Nile virus. From a Mercury News article: Worried health officials will embark today on an aerial search for backyard, watery havens for mosquitoes that potentially carry the deadly . . .


Suburbs Are Hurting From Birth Rates and Gas Prices

A recent N.P.R. report about housing prices in D.C. shows the close link between driving costs and the housing market. According to the report, home prices in the suburbs have fallen 18 percent while those in the District have risen 11 percent. No doubt some of this difference is due to a change in demand toward the District resulting from . . .


The Birth of the Death Incentive?

Sixty-nine-year-old Bob Fanning may have hit upon a new senior citizen benefit that makes your home a more attractive sell the closer you are to dying, the Chicago Tribune reports. To stand out from other Wisconsin homes in the real estate glut, Fanning offers this incentive: The buyer of his home will be named the beneficiary to a 10-year, $500,000 . . .


What’s So Special About the Subprime Mess?

The answer, according to the economists Carmen Reinhart and Kenneth Rogoff, is … “not much.” Here’s what they describe in a new NBER working paper about the causes and consequences of the current subprime crisis: Our examination of the longer historical record finds stunning qualitative and quantitative parallels to 18 earlier post-war banking crises in industrialized countries. Specifically, the run-up . . .


The FREAK-est Links

U.S. government cracks down on street gangs. (Earlier) Martin Feldstein discusses inflation, income disparity, and the housing market. The Ivory Coast tries a new tactic for tardy employees: be on time, win a house. Busy airports hire “sign consultants” to reduce traveler confusion.


The FREAK-est Links

Remodeling Online ranks return rates for home improvement projects. (Hat tip: Consumerist) How people in other countries stay healthy. (Earlier) Left-handed people rebounding in numbers. (Earlier) Hedge-funders offer $1 mill. to encourage cancer research-sharing.


The FREAK-est Links

British Airways faces class action for losing luggage. (HT: Consumerist) The $100 iPhone rebate analyzed. Housing slump spells bad news for real estate agents. (Earlier) Can graph theory match kidney donors? (HT: BoingBoing)


The FREAK-est Links

Ron Paul takes all? ABC’s Langer on online “poll” results. (Earlier) Get Botox today, but possible melanomas require a wait. Kasparov, despair: computers learn checkers, Scrabble, Sudoku. (Earlier) New N.A.R. sales release overly optimistic? (Earlier)


Finally, Some Love From the Real Estate Industry

While it may be true that we have no fans at the National Association of Realtors, at least there is someone in the real estate industry — a commercial leaser in Memphis — that likes us. Enough, at least, to rip us off. I have to say, I really like the subtle shadowing they did on the book title; it’s . . .


One Buyer’s Real-Estate Story, With a Twist on the Commission

Los Angeles Times real estate columnist Peter Viles writes of a tale from would-be homebuyer and blogger Kate in the Valley, who hatched the following money-saving plan while making an offer on a home: Traditionally, when you buy a house you just give the purchase money to the seller and the seller pays the 5% commission out of that. But . . .


New York Parking Gets Pricier (for Cars) and, Temporarily, Cheaper (for Vespas)

I blogged a while back about parking spaces in New York City, wondering why there aren’t more spaces for sale rather than for lease. An article in yesterday’s New York Times reveals that more new buildings are indeed selling a few parking spaces, including one building in Chelsea whose five spots are selling for $225,000 apiece. This isn’t quite the . . .


Another Look at “Sellers’ Concessions” in Real Estate

Our recent New York Times Magazine article on the use of cash-back transactions in home sales produced a mountain of e-mail responses. Among the most interesting was this one from New York attorney Nishani Naidoo, a former real estate lawyer and member of the New York State Bar Association’s Real Property group. He has been distressed by the growth of . . .


Freakonomics in the Times Magazine: Payback Time

In their June 10, 2007, column for the New York Times Magazine, Dubner and Levitt present some interesting new research on real estate sales. No, it’s not what you’re thinking: more Realtor bashing! Although it is true that they have written before about the imperfect nature of the Realtor’s commission model, this column takes a somewhat different tack. It’s about a little-known trick known as a cash-back transaction, in which a buyer receives a “rebate” to finance his own down-payment – a rebate that the lending bank never finds out about. This blog post supplies additional research materials.