Essay 1: Institutional Investment, Asset Illiquidity, and Post-Crash Housing Market Dynamics

Abstract: I demonstrate that housing’s mildly segmented market structure adds an additional measure of asset illiquidity risk for owner-occupiers and their lenders by examining the effect of a house’s conversion from the owner-occupied market to the rental market. From 2012 to 2014, I find that owner-occupied houses that were purchased by institutional investors and converted to rentals after the real estate crisis sold for approximately 5% less than similar houses that sold to owner-occupiers. The large discount was in addition to REO, foreclosure, short sale, and cash purchase discounts which, when combined, highlight the low liquidation value for owner-occupied housing.

Essay 2: Homeownership: An examination of its effect on house prices

Abstract: Subsidizing homeownership is only justifiable if it increases homeownership attainment and creates external benefits that outweigh their costs. Using parcel-level panel data I isolate and examine the effect of homeownership on surrounding house prices. Homeownership has a causal effect on house prices, but substantial variation exists across quantiles. Changes in homeownership have a lesser (greater) effect on house prices in the upper (lower) deciles of the conditional house price distribution - despite the fact that households in the upper deciles are the primary beneficiaries of the federal tax subsidies for homeownership.

Essay 3: School Quality, Latent Demand, and Bidding Wars for Houses

Abstract: I examine the recent rise of bidding wars and their effectiveness relative to traditional listing strategies. A simple theoretical model predicts that underpricing a house to incite a bidding war will be most effective in housing markets with high levels of latent demand. I use school quality as a proxy for latent demand as households with children naturally want their kids to go to the best school possible. I posit that the limited supply of housing within high quality school districts creates latent demand for housing within those districts. Evidence from Atlanta supports the model - I find that underpricing a house to incite a bidding war is more effective in markets with latent demand. However, underpricing does not outperform traditional listing strategies.