Real Estate

Environmental regulation in the United States has undergone a slow evolution from command and control strategies towards market-based regulations. One such innovation is the Toxics Release Inventory (TRI), a regulation that requires polluting firms to publicly disclose information about their toxic emissions. The basic tenet of this regulation is that it corrects for informational asymmetries between polluters and households, allowing communities to pressure polluters to decrease their emissions.

The permanent-income hypothesis (PIH) of Milton Friedman (1957) states that the agent saves in anticipation of possible future declines in labor income (John Y. Campbell, 1987). He also saves for precautionary reasons, and dissaves because of impatience. To justify the PIH in an intertemporal optimization framework, it has been conventional to assume both (i) quadratic utility, to turn off precautionary motives (Hall, 1978), and (ii) equality between the subjective discount rate and the interest rate, in order to rule out dissavings for lack of patience. Neither assumption is plausible.

In terms of housing issues, the primary public policy focus of economists has been the affordability of homes, mortgage availability, land-use regulation, and rent control. Studies of land-use regulation focus on the effects of regulation on the price of owner-occupied housing. Work on low-income housing has concerned itself more with issues of measurement and the debate over supply-side versus demand-side subsidies.

Financial economists have debated the impact of dividend taxes on firm valuation for decades, but existing empirical evidence is mixed. In this study, we avoid certain complications inherent in previous empirical work by exploiting institutional characteristics of Real Estate Investment Trusts (REITs). For REITs, dividend policy is largely non-discretionary, share repurchases are not tax advantaged relative to dividends, and the market value of a firm's assets is relatively transparent to investors.

Recent papers have shown that managers time their equity offerings based on the value of share prices relative to the book value of the firm or recent share price changes. We take advantage of unique attributes of real estate investment trusts (REITs) to show that managers' equity issuance and repurchase decisions are strongly impacted by perceived deviations in the relative value of their share prices. We have two principal findings. First, the ratio of price to net asset value (NAV) has strong explanatory power in predicting whether managers issue or repurchase shares.

Data from downtown Boston in the 1990s show that loss aversion determines seller behavior in the housing market. Condominium owners subject to nominal losses 1) set higher asking prices of 25-35 percent of the difference between the property's expected selling price and their original purchase price; 2) attain higher selling prices of 3-18 percent of that difference; and 3) exhibit a much lower sale hazard than other investors, but hold for both.

The logic of consolidation became a controversial mantra of the real estate industry during the late 1990s. Five years later, the empirical research on economies of scale cannot resolve the debate. In an industry as fragmented as real estate, market dominance and pricing power is exceedingly hard to establish.

The spectacularly successful transformation of Times Square has become a model for other cities. From its beginning as Longacre Square, Times Square’s commercialism, signage, cultural diversity, and social tolerance have been deeply embedded in New York City’s psyche. Its symbolic role guaranteed that any plan for its renewal would push the hot buttons of public controversy: free speech, property-taking through eminent domain, development density, tax subsidy, and historic preservation.

This paper examines the impact of a specific property tax limit, Proposition Image in Massachusetts, on the fiscal behavior of cities and towns in Massachusetts and the capitalization of that behavior into property values. Proposition Image places a cap on the effective property tax rate at 2.5% and limits nominal annual growth in property tax revenues to 2.5%, unless residents pass a referendum allowing a greater increase.