No abstract

This research examines the relationship between hedonically controlled housing price levels and subsequent changes in those prices across locations within MSAs. Are areas with a high price relative to an “imputed rent” paying for higher appreciation? In an efficient market (e.g., Gordon Growth Model), as fundamentals (impute rent) differ across locations and change over time, anticipation of these should generate a positive correlation between (residual) price levels and subsequent price changes. We undertake these tests in four different MSAs using a panel of repeat‐sale house price indices that have been scaled to price levels with the hedonic attributes of the house and ZIP code. In three markets we find that identical houses in higher priced ZIP codes subsequently appreciate faster. In one market we find that there is little statistical difference.

Higher sales "Granger cause" higher prices, but higher prices "Granger cause" both lower sales and a growing inventory of units-for-sale. These relationships together provide a more complete picture of the housing market -suggesting the strong positive correlation in the data results from frequent shifts in the negative price-to-sales schedule.

This paper provides a rigorous study on the change in Central Provident Fund (CPF) policy in Singapore on 1 September 2002, on household mobility in general and on the affordability and accessibility of potential home-buyers in particular. The change brought about increased accessibility but reduced affordability for home-buyers. The latter has an impact on the shortfall months which are positively related to changes in mortgage rate, mortgage term and property price and negatively related to the amount of CPF available for home purchases. Further, the low critical price that households can afford without experiencing any shortfall implies that the majority of public and private home-buyers will be affected by the policy change. Consequently, the improvement in accessibility by allowing the use of CPF for downpayment may stimulate demand at the cost of higher financial risk to home-buyers and mortgage lenders.

This paper examines how communities will behave if they are given the option of taxing the property of commercial establishments (factories, shopping centers, office buildings, etc) at different rates from residential housing. In the last 2 decades many states have enacted legislation which allows communities to discriminate in this manner-called "classification". We build a simple model wherein firms provide tax revenue without using local services and also create a valuable local job base. Towns thus confront a well defined choice: raise commercial taxes and gain revenue but risk loosing jobs. Firms in turn need to choose a community to locate in but do so with a (finite) negative elasticity with respect to the town taxes. The model yields two schedules between commercial tax rates and firm concentration in a community. A "demand" schedule has greater firm concentration leading a town to select higher commercial taxes, while a "supply" schedule has higher taxes leading to less firm concentration. The model comparative statics suggest that smaller and wealthier communities will encourage firms by keeping taxes low and rely less on their tax subsidy. Empirically we create a panel of towns in Massachusetts that covers the years prior to and after the state allowed such tax discrimination. With this data we find that towns with more pre-existing commerce chose to discriminate most, that such higher taxes gradually do discourage firm location, and that smaller and wealthier towns tend not to engage in tax discrimination.