William Wheaton

William Wheaton
Massachusetts Institute of Technology | MIT · Department of Economics

About

104
Publications
32,225
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6,853
Citations
Citations since 2016
6 Research Items
1819 Citations
2016201720182019202020212022050100150200250300
2016201720182019202020212022050100150200250300
2016201720182019202020212022050100150200250300
2016201720182019202020212022050100150200250300

Publications

Publications (104)
Article
This research examines the relationship between hedonically controlled housing price levels and subsequent changes in those prices across locations within MSAs. Are areas with a high price relative to an “imputed rent” paying for higher appreciation? In an efficient market (e.g., Gordon Growth Model), as fundamentals (impute rent) differ across loc...
Article
In this article, the authors investigate the utility of using a hedonic model in constructing an index of yields on commercial mortgage loans. They use a large unique proprietary dataset of mortgage originations from 2000Q3-2012Q4 to construct a hedonic model of yields as a function of loan characteristics as well as time effects. The authors then...
Article
Full-text available
The research reported in this article examines how the volatility of real estate markets can be exactly decomposed into supply-side and demand-side factors that add up. What allows this is measuring volatility with vacancy, rather than examining rents, income, or investment return. In this decomposition, the role of supply depends keenly on its tim...
Article
This article briefly summarizes the current state of the US housing market, and then proposes two solutions to bring the owner and rental markets back into equilibrium in a much quicker time frame than what might occur naturally. The first solution involves a restructuring of existing mortgages where the lender and borrower effectively become equit...
Article
MSA-level estimates of a housing supply schedule must offer a solution to the twin problems of simultaneity and stationarity that plague the time series data for local housing prices and stock. An Error Correction Model (ECM) is shown to provide a solution to stationarity, but not simultaneity. A Vector Error Correction Model (VECM) is suggested to...
Article
This paper examines how communities will behave if they are given the option of taxing the property of commercial establishments (factories, shopping centers, office buildings, etc) at different rates from residential housing. In the last 2 decades many states have enacted legislation which allows communities to discriminate in this manner – called...
Article
Full-text available
Since the 19 th century, the dominant view of urban land use has been based on the Ricardian rent, monocentric city model. Elaborations and embellishments by Alonso [1964], Mills [1972] and a host of others have not altered the two critical features of this model. The first is that land use at each urban location is determined by implicit auction –
Article
We formalize a general equilibrium theory of a metropolitan area housing market whose local governments influence house price by regulating their supplies of land. The regulatory decisions are made by current residents who already own housing, but the impact of these decisions on prices is determined by new entrants who must purchase housing. The c...
Article
The retail industry in the 21st century is undergoing a confluence of transformative changes. In this paper we discuss particularly noteworthy changes related to demography, retail economics and the Internet. We note how, in reaction to those transformations, brick-and-mortar retailers have developed innovative strategies to maintain growth and sto...
Article
In this paper we revisit many studies that have attempted to explain the determinants of real estate capitalization rates. We introduce two new innovations. First we are able to identify two macroeconomic factors that greatly impact cap rates besides risk free treasury rates. These are the general corporate risk premium operating in the economy, an...
Article
This research examines housing market price efficiency across locations within a metropolitan market the hallmark of hedonic theory. Our innovation is to introduce temporal as well as spatial considerations of price efficiency. In an efficient market, the price (level) of housing must not only compensate for current heterogeneity (housing and locat...
Article
In this paper we revisit the many studies that have attempted to explain the determinants of commercial real estate capitalization rates. We introduce two new innovations. First we are able to incorporate two macroeconomic factors that greatly impact cap rates besides treasury rates and local market fundamentals the variables most commonly used in...
Article
Full-text available
This paper proposes a theory of city size distribution via a hierarchy approach rather than the popular random growth process. It does so by formalizing central place theory using an equilibrium entry model and specifying the conditions under which city size distribution follows the power law. Central place theory describes the way in which a hiera...
Article
Full-text available
This paper examines how communities will behave if they are given the option of taxing the property of commercial establishments (factories, shopping centers, office buildings, etc) at different rates from residential housing. In the last 2 decades many states have enacted legislation which allows communities to discriminate in this manner – called...
Article
This study analyzes the impact of contemporaneous loan stress on the termination of loans in the commercial mortgage-backed securities pool from 1992 to 2004 using a novel measure, based on changes in net operating incomes and property values at the metropolitan statistical area-property-type-year level. Employing a semi-parametric competing risks...
Article
In this article, the authors revisit many studies that have attempted to explain the determinants of real estate capitalization rates. Two new innovations are introduced. First, the authors identify two macroeconomic factors, in addition to risk-free Treasury rates, that greatly impact cap rates-the general corporate risk premium operating in the e...
Article
This paper examines the causes of the run up in house prices between 1998 and 2006 and the subsequent fall. It is argued that two unique factors have been at work: a true "bubble" in 2nd homes, and a fundamental expansion and now contraction of mortgage credit availability. These "new" factors render traditional econometric forecasting relatively u...
Article
Full-text available
This paper examines the strong positive correlation that exists between the volume of housing sales and housing prices. We first examine gross housing flows in the US and divide sales into two categories: transactions that involve a change or choice of tenure, as opposed to owner-to-owner churn. The literature suggests that the latter generates a p...
Article
This article is able to put together a database of 86 repeat-sales transactions for office properties in lower and midtown Manhattan spanning the years from 1899 to 1999. Using this very limited database, decade-interval changes in real property prices are estimated-with varying degrees of precision. Our conclusions are two fold. First, adjusting f...
Article
This empirical paper examines the question of whether movements in housing sales predict subsequent movement in house prices - or the converse. The former (positive) relationship is well hypothesized by several frictional search models of housing market transactions or "churn". The latter relationship has been hypothesized by two theories. Both los...
Article
This paper examines the inflation in housing prices between 1998 and 2005 and investigates whether this run-up in prices can be ‘‘explained’’ by increases in demand fundamentals such as population, income growth, and the decline in interest rates over this period. Time series models are estimated for 59 MSA markets and price changes from 1998 to 20...
Article
Current construction cost indices typically are derived by applying national weights to local costs for materials and labor. In this study, construction cost indices are developed that are based on actual contractor tenders for projects. As such, they incorporate full variation in factor proportions, as well as factor costs, contractor overhead, an...
Article
It is axiomatic that all real estate is local. The question is whether very local submarkets within an MSA behave differently in terms of their fundamentals, and if so whether this behavior is priced appropriately so that total investor returns are approximately the same across locations. Longterm data on the market fundamentals of a large sample o...
Article
This paper investigates how a system of local law enforcement agencies operates within a metropolitan area. In a cross section of 236 US MSA the paper finds that greater agency fragmentation leads to less law enforcement effort (resources), but also to less crime! This seemingly contradictory result is robust to many alternative specifications. To...
Article
This study analyzes the impact of contemporaneous loan stress on the termination of loans in the commercial mortgage-backed securities pool from 1992 to 2004 using a novel measure, based on changes in net operating incomes and property values at the metropolitan statistical area-property-type-year level. Employing a semi-parametric competing risks...
Article
This paper examines the behavior of ski resort property in a major New England market over the last 25 years. A constructed property price series reveals that nominal prices are quite volatile and only slightly higher today than in 1980. These ?uctuations and trends are investigated with a time series VAR model. The ?ndings indicate that (1) natura...
Article
For centuries, cities have been modeled as having centered employment—scarce access to which generates land rent. This paper first presents some new empirical evidence that in US cities actual employment turns out to be almost as dispersed as residences. This range of urban forms is generated with analytic ease in a model that assumes land can have...
Article
This article addresses empirically recent concerns about a dichotomy between capital markets and real estate market fundamentals. Motivated by recent decreases in capitalization (cap) rates in light of weak market fundamentals some analysts have argued that the latter no longer matter in real estate asset pricing. Some other analysts argue that the...
Article
In the United States, land use regulation is the responsibility of more than 18,000 local governments, mostly cities and towns. While the legal authority for such regulation lies with state governments in virtually all parts of the county, such power has been legislatively delegated to local government for almost half a century. This delegation of...
Article
Full-text available
For centuries, cities have been modeled as geographically centered markets in which locational scarcity generates Ricardian Land Rent that in turn increases over time as cities grow. This paper first presents some empirical evidence that this is not the case: inflation-adjusted locational rent does not increase over time - despite enormous urban gr...
Article
Theory predicts that within a metropolitan area, employers located where there is difficult commuting will have to compensate their workers with appropriately higher wages. This should hold whether one is comparing central city work locations with those at the fringe, or simply differences between suburban “edge cities.” In the longer run, if emplo...
Article
This paper develops an Asymmetric Nash Equilibrium model of welfare provision by states when the benefit payment is a local public good and a fixed population of welfare recipients distributes itself between states with logistic “migration” function. The model shows that state size is an important demand shifter across states because it alters the...
Article
This paper develops an Asymmetric Nash Equilibrium model of welfare provision by states when the benefit payment is a local public good and a fixed population of welfare recipients distributes itself between states with logistic "migration" function. The model shows that state size is an important demand shifter across states because it alters the...
Article
Using the 5% public use micro sample of the 1990 U.S. census, we find that observationally equivalent workers in the manufacturing sector earn higher wages when they are in urban labor markets that have a larger share of national or metropolitan employment in their same occupation and industry groups. Quantitatively, the effect is large, with an el...
Article
Only retail tenants pay their landlord a percentage of revenue in addition to the traditional fixed rent. The latter has often been shown to vary widely across stores-inverse to the sales externalities generated by the store. This paper demonstrates that revenue percentages vary widely as well, and positively with fixed rent (sales externalities)....
Article
Abstract This,paper,examines,the,behavior,of ski,resort,property,in a,major,New England,market,over,the,last,25 years. Aproperty,price,series,is constructed,for the Loon Mountain resort, which is believed to be quite typical of New England Ski areas.,This,series,reveals,that,nominal,prices,are,no higher,today,than,they were in 1980, and consequentl...
Article
This paper demonstrates that different types of real estate can have very different cyclic properties. Empirically, it is shown that they do, and the question is posed as to what might distinguish between property markets where movements are largely stable responses to repeated economic shocks and those undergoing a continuing endogenous oscillatio...
Article
This paper develops an Asymmetric Nash Equilibrium model of welfare provision by states when the benefit payment is a local public good and welfare recipients distribute themselves between states with a finite elasticity (through a logistic function). The model thus provides estimates of how the degree of benefit underprovision varies with the reci...
Article
A recently constructed data series suggests that the hotel industry has experienced two rather large building booms from 1969 to 1994. By contrast, hotel demand seems to move closely with the United States economy, at a much higher cyclic frequency. Occupancy and room rental rates follow the slower movements in supply. A structural model is estimat...
Article
Full-text available
It was well documented that monocentric spatial models with congestion require driving tolls to generate market efficiency. Because driving and location are equivalent, tolling congestion is the same as regulating density. This paper shows that internalizing the congestion externality always requires upward adjustments to market density—which are g...
Article
Full-text available
This paper applies structural econometric methodology to estimating and forecasting the greater London office market. We assemble a time series covering the 1970-1995 period and estimate equations for net space absorption, movements in rents, and new building orders. Together with two identities, calculating the stock and vacancy, these form a comp...
Article
This article describes the CB Commercial/Torto-Wheaton (CBC/TW) database from the collection of data through the creation of the aggregate database. In addition, information on accessing the data for research purposes is included.
Article
This article describes the CB Commercial/Torto Wheaton (CBC/TWR) database from the collection of data through the creation of the aggregate database. In addition, information on accessing the data for research purposes is included.
Article
This article analyzes the mechanism by which changes in the supply of developable land affect housing prices and housing output. The objective is to determine whether a sudden scarcity of land raises housing prices because of suppressed current housing production or because of higher investment demand (due to expected land scarcity and higher rents...
Article
We investigate the salary returns to the ability to play football with both feet. The majority of footballers are predominantly right footed. Using two data sets, a cross-section of footballers in the five main European leagues and a panel of players in the German Bundesliga, we find robust evidence of a substantial salary premium for two-footed ab...
Article
In this paper we develop three simplified models of the commercial land market within a two-center metropolis. In each model we focus on how exogenous differences in production costs between centers are capitalized into differences in commercial space rents and wages. We show that in a competitive land market, wages must account for most of the cap...
Article
In this study, we present a simple analytic framework that divides the real estate market into two markets: the market for real estate space and the market for real estate assets. After describing the size and character of flows and stocks in the U.S. real estate market, we use our framework to demonstrate the important connections between the spac...
Article
A recent inventory of industrial building in fifty-two major metropolitan areas of the country indicates that most such space is either owner occupied or single tenant. This suggests that the production of industrial space may be modeled as a firm "investment" decision. Using the completion date of each inventoried building, we construct a time ser...
Article
A model of the single-family housing market is proposed in which households that move are both buyers and sellers. Households move when a stochastic process leaves them dissatisifed with their current unit. Household buyers expend costly search effort to find a better house, while sellers hold two units until a buyer is found. The vacancy rate, fix...
Article
This paper presents additional evidence on the international nature of the “Great Moderation:" the apparent structural decline in the variance of GDP growth first documented in the United States. We find evidence of a similar reduction in volatility in the other G-7 countries and Australia. However, the timing and nature of the moderation varies co...
Article
This paper compares the income of those office properties that are included in the FRC index, with the appraised values that are used to determine the index's appreciation component. We find that the appraised value of the portfolio was a constant multiple of its current income, over the 1978-1988 period. This seems at odds with what modern valuati...
Article
This research confirms the existence of a strong vacancy rental adjustment mechanism in the market for office space, such as has been found in housing markets. Using national time-series data, we find that real office rents drop approximately 2% annually, for every percentage point of "excess vacancy" in the market. We also find that the definition...
Article
A review of the post WWII data on national office building construction and vacancy, reveals a recurrent ten-twelve year cycle. Specifying and estimating a structural econometric model for these series leads to several conclusions about this commercial real estate sector. First, the office market appears to "clear" quite slowly, and long-run expect...
Article
In most countries, the performance of the housing sector is regarded as somewhat problematic. The concern focuses on two issues. First, fre- quently a large segment of the lower-income population consumes housing services at levels below that which is considered socially desir- able. In the developing world, such units are usually referred to as "i...
Article
This article reports estimates of a cross national model for automobile ownership, fleet fuel efficiency, driving per vehicle, and as derived from these three, gasoline consumption. The model is a recursive system of equations derived by aggregating individual behavioral equations for the choice of a durable good and its usage. The results suggest...
Article
This paper compares "first-best" highway investment when congestion pricing is in effect with "second-best" investment when such pricing is not used. The paper's main result is that as the pricing of roads falls below social costs, "second-best" investment expands to accommodate demand, but not by nearly so much as would be called for under first-b...
Article
Full-text available
We show that the length of compulsory education has a causal impact on regional labour mobility. The analysis is based on a quasi-exogenous staged Norwegian school reform, and register data on the whole population. Based on the results, we conclude that part of the US-Europe difference, as well as the European North-South difference in labour mobil...
Article
Full-text available
In the United States, religious attendance rises sharply with education across individuals, but religious attendance declines sharply with education across denominations. This puzzle is explained if education both increases the returns to social connection and reduces the extent of religious belief, and if beliefs are closely linked to denomination...
Article
En la UE se ha estimado que los costes de la congesti�n representan el 2% de su PIB y que el coste de la poluci�n del aire y ruido supera el 0,6% del PIB, siendo alrededor del 90% de los mismos ocasionados por el transporte terrestre. Ante este hecho y el continuo aumento de la demanda del transporte privado frente al p�blico para los desplazamient...
Article
Research should be fundamental to transportation as a phenomenon, and yet central to the problems that need to be solved. This paper looks at the history of transportation research in the U.S. with a view toward understanding the bases of past research priorities, and deriving a basis for proposing future priorities. As a result, varieties of resea...
Article
Forecasts are an inherent part of economic science and the quest for perfect foresight occupies economists and researchers in multiple fields. The release of economic forecasts (and its revisions) is a popular and often publicized event, with a multitude of institutions and think-tanks devoted almost exclusively to that task. The European Central B...
Article
In a model of economic ‘clubs’, size is fixed and members consuming a public good raise the question of composition; with whom would they rather consume? This depends on the way collective consumption is financed, and three results are proven With a poll tax, clubs must be homogeneous in income for all to be satisfied With a marginal benefit (Linda...
Article
The paper reviews the early work of Herbert-Stevens in which linear programming was used to find a competitive equilibrium to an urban land market. First, it is demonstrated that a solution to the Herbert-Stevens model does not meet well-established criteria for an equilibrium. Secondly, a new linear programming model is suggested which is proven t...
Article
Existing research applying the Personal Wellbeing Index (PWI) in China is restricted to urban and rural samples. There are no studies for Chinese off-farm migrants. The specific aims of this study are (a) ascertain whether Chinese off-farm are satisfied with their lives; (b) investigate the equivalence of the PWI in terms of its psychometric proper...
Article
This paper examines the inflation in housing prices between 1998 and 2005 and investigates whether this run-up in prices can be ''explained'' by increases in demand fundamentals such as population, income growth, and the decline in interest rates over this period. Time series models are estimated for 59 MSA markets and price changes from 1998 to 20...

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