Browsing by Subject "Real Estate"
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Item Open Access Essays on Urban and Labor Economics(2011) Hizmo, AurelIn the first chapter of this dissertation I develop a flexible and estimable equilibrium model that jointly considers location decisions of heterogeneous agents across space, and their optimal portfolio decisions. Merging continuous-time asset pricing with urban economics models, I find a unique sorting equilibrium and derive equilibrium house and asset prices in closed-form. Risk premia for homes depend on both aggregate and local idiosyncratic risks, and equilibrium returns for stocks depend on their correlation with city specific income and house price risk. In equilibrium, very risk-averse households do not locate in risky cities although they may have a high productivity match with those cities. I estimate a version of this model using house price and wage data at the metropolitan area level and provide estimates for risk premia for different cities. The estimated risk premia imply that homes are on average about 20000 cheaper than they would be if owners were risk-neutral. This estimate is over 100000 for volatile coastal cities. I simulate the model to study the effects of financial innovation on equilibrium outcomes. For reasonable parameters, creating assets that correlate with city-specific risks increase house prices by about 20% and productivity by about 10%. The average willingness to pay for completing markets per homeowner is between $10000 and $20000. Productivity is increased due to a unique channel: lowering the amount of non-insurable risk decreases the households' incentive to sort on these risks, which leads to a more efficient allocation of human capital in the economy.
The second chapter of this dissertation studies ability signaling in a model of employer learning and statistical discrimination. In traditional signaling models, education provides a way for individuals to sort themselves by ability. Employers in turn use education to statistically discriminate, paying wages that reflect the average productivity of workers with the same given level of education. In this chapter, we provide evidence that graduating from college plays a much more direct role in revealing ability to the labor market. Using the NLSY79, our results suggest that ability is observed nearly perfectly for college graduates. In contrast, returns to AFQT for high school graduates are initially very close to zero and rise steeply with experience. As a result, from very beginning of the career, college graduates are paid in accordance with their own ability, while the wages of high school graduates are initially unrelated to their own ability. This view of ability revelation in the labor market has considerable power in explaining racial differences in wages, education, and the returns to ability. In particular, we find a 6-10 percent wage penalty for blacks (conditional on ability) in the high school market but a small positive black wage premium in the college labor market. These results are consistent with the notion that employers use race to statistically discriminate in the high school market but have no need to do so in the college market.
Item Open Access GREENING YOUR HOME: MAKING HOME SUSTAINABILITY BUYER AND SELLER-FRIENDLY(2024-04-26) Tesla, SuzanaFor most, the purchase of a home is the single largest investment that an individual will make in his or her lifetime. While the purchase itself comes with a variety of strings, unexpected expenses and uncertainties, consumers have added an additional level of home sustainability into the mix. As consumers have become more environmentally conscious and educated, they have also started to demand the same from their agents and the industry. However, agents, buyers, and sellers continue to have minimal knowledge regarding residential home sustainability, especially for homes that are not newly built. Green certifications, which could provide various insights, apply primarily to newly built homes, and the green features on MLS are limited and create major gaps for understanding home sustainability. This leaves an opportunity for the development of a system that will provide greater insights on home sustainability to buyers while also being easy to develop and use by the agents and the sellers. This paper bridges this gap by assesses the current environment, green initiatives, and various stakeholder to create a set of guidelines to assist agents in developing a green score that buyers and sellers can use to easily and efficiently compare home sustainability. Six different areas are covered in the green score: indoor environment, external environment, energy efficiency, water efficiency, walkability, and landscaping. Each area is discussed in detail in terms of the components and the opportunities for improvement, and a set of questions is developed that would allow agents and sellers to assess the home’s green features and sustainability. The questions, like the property disclosures that sellers are required to fill out, are simple to answers with either a yes/no response, a percentage, a number, or a selection from the provided options. The questionnaire has a scoring criterion, which is then used to calculate the green score - first by averaging each area separately and then by averaging the average of each area. This prevents areas that have more questions from carrying more weight, and thus gives homes that do not score well in one area the opportunity to still score well overall. An initial prototype of the green score was designed and tested for feedback. Most notably, users were interested to know more about the score, its significance, and its impact on potential buyers. Others also mentioned wanting a more tangible aspect of the score, such as the financial savings associated with a particular score or the health impacts. Based on this feedback, a new design was created that presented the overall green score at the center, with the option to click on the six areas on the side and obtain more information about the scoring for that category and various resources related to the measures. This would help users further explore home sustainability beyond just the green score. This initial design of the green score is just the first step to making residential home sustainability easily accessible for agents, buyers, and sellers. From there, there are three improvements that can be made to the score: integration with outside data providers, addition of a financial savings components, and maintenance of historical data. By collaborating with other sources, such as Energy Star or the Air Quality Index, additional data can be merged to further add to the credibility of the green score. These other sources could also be used to calculate the financial savings more accurately, such as the information from the Energy Star product finder. From there, as more data is collected and the green score if filled out during each consecutive home sale, historical data can help identify trends and improvements in a home, while also making it easier for future agents to fill out the green score questionnaire by adjusting the previous one to include any changes since the last sale. Overall, the green score has the potential to bring greater transparency and information when it comes to home sustainability in the residential real estate brokerage industry. It is more agent, buyer, and seller friendly, with various improvements available down the line to allow for even greater applicability. With greater demands from buyers and increased environmental regulations, the green score can help buyers and sellers make a first, easy step toward understanding home sustainability and the potential changes that can be made. It sets the tone for future conversations and create a needed change in the brokerage industry.Item Open Access Implementing a Net Zero Carbon Strategy in the Real Estate Industry(2023-04-28) Barry, JamieTishman Speyer is a real estate developer that owns an international portfolio of office properties in major cities and has a goal to reach net zero carbon emissions across global operations by 2050. As an intern with Tishman Speyer last summer, I delivered a tool that provides pathways for each US asset to reach operational net zero. I worked with internal stakeholders such as asset managers, portfolio managers, engineers, and members of the sustainability team to inform the tool’s design. The tool includes financial models that project NPV and IRR associated with individual energy efficiency, retrofit, electrification, and on-site renewable projects by evaluating future energy costs, fines from regulators, and future REC/offset costs. The tool also estimates emissions reductions associated with energy projects, recommends project prioritization, and estimates future emissions under multiple decarbonization scenarios. For my MP Project, I expanded the scope of this tool and helped deploy it. I worked throughout the year to add features that provide scenario-level financial models, incorporate scenario Opex and Capex changes into property Profit and Loss Statements, and give users the option to design customized decarbonization scenarios. I helped Tishman Speyer use this tool to generate net zero pathway reports for all US assets. Reports will be sent to employees and investors, ensuring that all stakeholders understand what is needed for Tishman Speyer to reach net zero.Item Open Access The Subsidized Hong Kong Property Market: Public Utilities, Proximity Effects, Price Indices and Policy Impact(2015-04-17) Ye, YifanThis paper presents a geospatial analysis of the government-subsidized, semi-commercial sector of the Hong Kong real estate market. Using a time dummy hedonic regression model, size, age, seasonal, floor-level, coastline-distance and commuting effects are investigated. Significant elevation gradient and new-station anticipatory effects are found for apartment proximity to the metro system. The paper also finds evidence of differentiated density spillover influences from various HKSAR housing sectors, positive for commercial housing and negative for the public rental unit market. In addition, a hedonic price index is constructed for the subsidized market. Two examples are included to demonstrate the index’s policy-side applications.