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Housing, House Prices, and Airbnb

Paper Session

Saturday, Jan. 5, 2019 8:00 AM - 10:00 AM

Hilton Atlanta, 215
Hosted By: American Real Estate and Urban Economics Association
  • Chair: Andra Ghent, University of Wisconsin-Madison

Cash to Spend: Credit Constraints, IPO Lockups, and House Prices

Jiro Yoshida
,
Pennsylvania State University
Barney Hartman-Glaser
,
University of California-Los Angeles
Mark Thibodeau
,
Pennsylvania State University

Abstract

This study empirically demonstrates the positive impact of initial public offerings (IPOs) on local housing prices in California from 1993 through 2017. In the spirit of the difference-in-difference approach, we test whether hedonic price indexes increase after IPO events more for the areas around IPO firm headquarters. We use the IPO events of public listing, issuing, and lockup expiration to distinguish changes in the shareholders' expected wealth, assessed wealth, and immediately available wealth, respectively. HPIs increase more within 10 miles of IPO headquarters than in the surrounding area by 1.0% after listing and 0.8% after issuing but approximately zero after lock-up expiration. This result suggests that original shareholders change their housing demand when their wealth changes but not when liquidity constraint is relaxed. The impact is larger when the wealth increase by IPO is larger; e.g., higher offer price, larger IPO proceeds, and larger share underpricing at listing. The impact is also larger for younger and smaller firms.

Can Landlords be Paid to Stop Avoiding Voucher Tenants?

David C. Phillips
,
University of Notre Dame
Dionissi Aliprantis
,
Federal Reserve Bank of Cleveland
Hal Martin
,
Federal Reserve Bank of Cleveland

Abstract

Despite being eligible for use in any neighborhood, housing choice vouchers tend to be redeemed in low opportunity neighborhoods. This paper investigates whether landlord behavior contributes to this outcome by studying the recent expansion of neighborhood-based voucher limits in Washington, DC. We conduct two waves of a correspondence experiment, one before and one after the expansion. Landlords heavily penalize tenants who indicate a desire to pay by voucher. The voucher penalty is larger in high rent neighborhoods, pushing voucher tenants to low rent neighborhoods. We find no evidence that indexing rents to small areas affects landlord acceptance of voucher tenants or ultimate lease-up locations in an economically significant way. Moving to neighborhood-based rent limits does increase the likelihood that any voucher tenants live in a high-rent tract, but these effects are small.

On the Strategic Timing of Sales by Real Estate Developers- To Wait or To Presell?

Ling li
,
University of Cambridge
Xiao Bao
,
University of Cambridge
Kwong Chau
,
University of Hong Kong

Abstract

In timing property listings, real estate developers can exercise the “option to wait” or “option to presell” to mitigate price uncertainty risk. In this study, we study the effectiveness of both strategies under a unified framework. We test our hypotheses using residential development data from Hong Kong between 1995 and 2015. Empirical evidence shows that when the presale option is unavailable, developers tend to adopt the waiting strategy when facing price uncertainty risk. Conversely, when a presale option is available, developers will accelerate sales when price volatility is high. Moreover, the effectiveness of the presale option depends substantially on government restrictions. Our approach facilitates the identification of the net effect of either tool and provides an opportunity to unify conflicting findings in the literature.

Which Neighborhood Joins the Sharing Economy and Why? - The Case of the Short-term Rental Market in New York City

Xiaodi li
,
New York University

Abstract

As the sharing economy has emerged, the short-term rental market has grown. The
difference between casual and commercial short-term rental operators is important
but seldom discussed. Short-term rental platforms help casual operators earn extra
income, bringing benefits to local residents. On the contrary, commercial operators
impose burdens on local residents, because they decrease the long-term rental supply,
further exacerbating the housing affordability issue. In order to understand which
neighborhoods in New York City are experiencing such benefits and burdens of short-
term rental use, this paper uses data from Inside Airbnb, American Community Survey
(ACS), and Department of City Planning (PLUTO), and finds within central areas,
neighborhoods with lower long-term rents bear greater burdens from commercial short-
term rental use. In addition, neighborhoods with higher black and Hispanic population
share less benefits from casual short-term rental use.
Discussant(s)
Luke Stein
,
Arizona State University
Andrew Hanson
,
Marquette University
Kasper Meisner Nielsen
,
Hong Kong University of Science And Technology
Thomas Davidoff
,
University of British Columbia
JEL Classifications
  • L2 - Firm Objectives, Organization, and Behavior
  • R3 - Real Estate Markets, Spatial Production Analysis, and Firm Location