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Housing prices, 1975-2008(Tokyo metropolitan area)

Housing prices, 1975-2008(Tokyo metropolitan area)

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This paper draws on six waves of Japanese household longitudinal data (Keio Household Panel Survey, KHPS) and estimates a conditional fixed effects logit model to investigate the effects of housing equity constraints and income shocks on own-to-own residential moves in Japan. By looking at contemporaneous extended Loan-to-Value (ELTV) and extended...

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Citations

... Second, this research examines the effect of capital constraints on individual homebuyers' pricing decisions. While the literature indicates how capital constraint delays homeownership for young households (Bajari et al., 2013;Haurin et al., 1996;Linneman & Wachter, 1989;Seko et al., 2012), relevant studies are centered on individual households' tenure choices but are largely silent on the trading outcomes once they decide to trade. Our work adds to the literature by identifying that the capital constraints of starter home buyers distort the pricing of home purchases. ...
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Capital constraints are a major obstacle that holds back cash-poor households from purchasing a home. A workaround is to compromise the housing size and quality by buying a starter home one can marginally afford first. This study aims to investigate how capital constraints distort the pricing of starter homes. In Hong Kong, the government builds subsidized starter homes, which can be resold either to any households at full market prices through the privatized submarket or to households of limited affordability at lower prices through the affordable submarket. The subsidy in the latter case comes from the equity contribution of the government. If there were no capital constraints, the price gap between the two submarkets should simply be the government’s equity. However, our empirical analysis reveals a much smaller price gap, indicating that households with limited affordability are willing to pay a starter home premium in order to relax their capital constraints. Our estimation shows that the premium is in the range of 4.5% to 6.8%, and enlarges when the housing market becomes more unaffordable. The pricing of starter homes is based not only on their quality but also on their ability to relax capital constraints.
... Seko and Sumita (2007a) studied the effectiveness of public policies in Japan and confirmed that both tax reduction and amendments in the Rental Act to overprotect borrowers resulted in residential mobility. Using their own survey in 2005, Seko et al. (2012) showed that negative income shocks and housing equity constraints explain the low residential mobility in Japan. Moreover, based on survey data conducted in Kanto region (areas surrounding Tokyo), Ishikawa and Fukushige (2015) suggested that improved access to public transportation, shopping areas, and medical facilities becomes motivations to move houses. ...
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Using household survey data from the recent economically depressed period, we attempt to identify typical household characteristics by residential type and study whether households change their residence at different stages of life. We find that the general trend in residential choice is influenced by socioeconomic background. The results of a multinomial probit estimation highlight that the probability of homeownership is higher in rural areas and increases with age of household heads, financial wealth, and family size. In contrast, the probability of renting a house is higher in urban areas and among female households. Moreover, it is observed that people adjust residential size despite market imperfections. The dwelling size increases with age of household heads and declines once they reach retirement age; however, the residential mobility is low at older ages. Furthermore, there are gender differences in terms of attitudes toward downsizing residences; female households are more willing to accept downsizing than are male households.
... A falling housing price restricts the household's financial ability and reduces population mobility. It results in the so-called equity lock-in effect (Blozea & Skak, 2016;Bricker & Bucks, 2016;Chan, 2001;Engelhardt, 2003;Ferreira, Gyourko, & Tracy, 2010Foote, 2016;Han, 2010;Modestino & Dennet, 2013;Seko, Sumita, & Naoi, 2012;Sterk, 2015) Furthermore, some studies have argued that a rise in housing prices increases a household's housing equity, making it easier for households to move (Disney, Gathergood, & Henley, 2010;Kiel, 1994). According to the above-mentioned studies, the influence of the housing price on migration is positive. ...
... Among those with high initial loan-to-value ratios, the differences are even greater. Seko et al. (2012) investigate the effects of housing equity constraints and income shocks on own-to-own residential moves in Japan. By looking at contemporaneous extended loan-to-value (ELTV) and extended debt-to-income (EDTI) ratios under the recourse loan system, they find that housing equity constraints and negative income shocks significantly deter own-to-own residential moves for positive equity households. ...
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... 3 their other assets. As a result, the negative effects of housing equity constraints on residential mobility should be much more severe under the recourse loan system than under the non-recourse system (see Seko, Sumita and Naoi, 2009). When we consider the role of leverage in influencing asset prices, the well-known proposition under the non-recourse loan system is that when buyers finance the purchase of assets by borrowing, this can lead to the prices of such assets becoming more sensitive to exogenous changes in fundamentals. ...
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Highly productive economies require a flexible labor force with workers that move in accordance with the changing demand for goods and services. In times with falling housing prices, the mobility of home owning workers may be hampered by a lock-in effect of low or even negative housing equity. This paper explores the effect of housing equity on both the residential mobility and the commuting pattern of homeowners. We merge administrative registers for the Danish population and properties and get highly reliable micro data for our analysis. We find that low and negative housing equity substantially reduces residential mobility among homeowners. The negative effect of locked-in low equity families on labor market mobility may be mitigated by commuting. However, our results show that family heads in low or negative equity homes are not found to commute more than households with higher housing equity, but also that a considerable fraction of home owning family heads commute. The analysis of the joint decision of homeowners to commute or move shows that the option of moving, as an alternative to not moving and not commuting, is chosen by five to six percent of homeowners with low housing equity, while the option of not moving but commuting is chosen by 60 percent.