Panel: Dynamics of Housing Price Change: Institutional and Government Regulation Forces
(Housing and Community Development)

Saturday, November 4, 2017: 8:30 AM-10:00 AM
Hong Kong (Hyatt Regency Chicago)

*Names in bold indicate Presenter

Panel Organizers:  Brian Yeokwang An, University of Southern California
Panel Chairs:  Seva Rodnyansky, University of Southern California
Discussants:  Raphael Bostic, Federal Reserve Bank of Atlanta

Property Right Restriction and House Prices
Kwan Ok Lee and Joseph Ooi, National University of Singapore

How do citizens value their government's policies? How do they weigh these benefits against the costs they face in society? This panel provides novel explanations to these important questions by using house prices as a measure of the value Americans place on the costs and benefits of public policies on their communities from land-use regulations, formation of new local governments, and development restrictions in the United States and Singapore. Policymakers need better data and better measurement to understand the impacts of their actions and the desires of their constituents. In the spirit of this year's emphasis on state and local policy, we propose a panel that uses rich new datasets of local housing transactions and surveys to answer important questions about the economic effects of these local policies.

The first paper uses an original GIS interface in the neighborhoods of Boston to capture how citizens prefer their own cities to develop. To measure how citizens value policy costs and benefits, the study will ask how much the respondent would have to be compensated to agree to the proposed development in their neighborhoods. This measurement of ‘willingness to pay’ for avoiding growth has not been tested before and will shed light on the feasibility of compensation to solve collective action problems in urban growth.

The second paper studies special districts that provide public goods and services under local control to communities. By examining the extent to which formation of special districts bring benefits to local communities in two counties in Southern California, the paper quantifies the spillover benefit of public good amenities capitalized into property values in the district neighborhoods. The preliminary findings show that the magnitude of this property value benefit is so substantial that it dominates any disadvantage in the cost of service provision under local control, making special district a more cost-effective institutional choice for community governance than higher level municipal government.

The last two papers address government regulation on house prices in the United States and in Singapore, respectively.  The third paper examines land-use regulations and its effect on both house price and quality. While scholars have studied such impact on house price at the metropolitan level, its impact on house quality dispersion at the municipal level has been rarely studied. Notably, the second paper explores if such land-use regulations have consequences for wealth inequality and access to homeownership at both a local and national level, asking who are most impacted by the land-use regulations in the housing market. The last paper assesses Singapore’s affordability housing policy in which the government temporarily banned the transfer of property rights on executive condominiums. Using natural experiment, the study compares the transaction prices of executive condominiums to those of private condominiums and finds the evidence for price discount in the treatment group for first ten years. The results imply that middle-class beneficiaries can enjoy both initial price discount and potential price appreciation from these kinds of policies.

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