Search results

1 – 10 of 819
Article
Publication date: 13 June 2024

James E. Larsen

The aim of this Education Briefing is to comment on the problematic issues that sometimes arise when using the internal rate of return (IRR) and/or the net present value (NPV) as…

Abstract

Purpose

The aim of this Education Briefing is to comment on the problematic issues that sometimes arise when using the internal rate of return (IRR) and/or the net present value (NPV) as a measure of expected investment performance. The briefing looks at the sometimes conflicting signposts that each benchmark presents and highlights ways that decision-makers can overcome or mitigate the effects of those problematic issues.

Design/methodology/approach

After a short review of the IRR and NPV techniques, this Education Briefing provides numerous examples of problematic issues that arise with certain cash flow profiles and suggests how to address them.

Findings

Both the IRR and NPV provide simple benchmarks that can mislead the decision-maker who is not familiar with the nuances of both techniques.

Practical implications

This review should heighten the reader’s ability to spot characteristics of proposed investments that may signal that a quick decision based on performance metrics may lead to disappointing results. These characteristics include: scale effects, unusual cash flow patterns and/or investments with dissimilar expected lives. Mutually exclusive investments merit special attention.

Originality/value

This is a review of existing performance measurement models.

Details

Journal of Property Investment & Finance, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1463-578X

Keywords

Article
Publication date: 1 August 2016

James E. Larsen

The purpose of this paper is to add to the single-family house bargaining power literature by investigating the bargaining power of the principals when the seller provides…

Abstract

Purpose

The purpose of this paper is to add to the single-family house bargaining power literature by investigating the bargaining power of the principals when the seller provides financing with an installment land contract (ILC).

Design/methodology/approach

Generalized spatial two-stage least squares regression is used to analyze data from 998 ILC transactions and 19,376 traditionally financed transactions all of which occurred in Montgomery County, Ohio between January 2002 and March 2011.

Findings

The results indicate that buyers using an ILC operate at a bargaining power disadvantage. In our sample, they paid approximately 6.64 per cent more, on average, than did buyers using traditional financing to purchase similar housing. This result occurred despite the fact that the included ILC transactions were limited to those carrying an interest rate that was above the Federal Housing Administration (FHA) rate at the time of contract origination.

Research limitations/implications

The study is limited to transactions that occurred in one county of a Midwestern state over a ten-year period. Therefore, the results may not apply in other locations. Valuable extensions of the current study would include an investigation to determine if similar results apply in other local housing markets. In addition, an examination of ILC transactions for other property types (e.g. undeveloped land, commercial properties, etc.) which may involve more sophisticated vendees could prove interesting.

Originality/value

This is the first study to investigate bargaining power in the single-family house market by focusing on ILC transactions. In this rather unique market segment, evidence of an imbalance of bargaining power is found. The results suggest that prospective purchasers, real property investors, fee appraisers, county auditors and others interested in determining the value of a single-family house using the transaction price of comparable properties take precautions in identifying comparable properties. The results indicate that house acquisitions facilitated with an ILC may not be a good comparable for a traditionally financed property and vice versa.

Details

International Journal of Housing Markets and Analysis, vol. 9 no. 3
Type: Research Article
ISSN: 1753-8270

Keywords

Article
Publication date: 9 March 2010

James E. Larsen

This paper aims to report the results of a study conducted to determine whether investors systematically pay less for single‐family houses than do buyer/residents.

778

Abstract

Purpose

This paper aims to report the results of a study conducted to determine whether investors systematically pay less for single‐family houses than do buyer/residents.

Design/methodology/approach

Data from 3,443 single‐family house transactions were subjected to regression analysis.

Findings

Investors in this study paid 13.24 percent less, on average, than buyers who reside in the property.

Research limitations/implications

The study was limited to transactions occurring during a single year in one American city. Future research could test whether the results apply in other locations. The study did not consider the influence of seller‐type on transaction price. Future studies could incorporate this facet of the transaction. The results have implications for property tax authorities and fee appraisers because the presence of investors in a housing market may introduce a two‐tiered transaction set which could distort the assessment process and/or the indicated value calculated by fee appraisers using the comparable sales approach.

Originality/value

This paper provides useful information on the impact of buyer‐type on house price.

Details

International Journal of Housing Markets and Analysis, vol. 3 no. 1
Type: Research Article
ISSN: 1753-8270

Keywords

Article
Publication date: 2 March 2012

James E. Larsen

The purpose of this paper is to determine if lender experience in disposing of repossessed single‐family houses in the local market is significantly related to the probability a…

Abstract

Purpose

The purpose of this paper is to determine if lender experience in disposing of repossessed single‐family houses in the local market is significantly related to the probability a property will sell. In addition, other factors that are significantly related to the market duration of repossessed houses are identified.

Design/methodology/approach

The Cox proportional hazard model is used to analyze transaction data for 2,099 single‐family houses in Dayton, Ohio. Title to each of these properties was obtained by lenders through foreclosure. The study period approximates the first three years of the subprime mortgage crisis in the USA: 2007‐2009.

Findings

The marketing efforts of lenders with more local property disposition experience are found to be superior to the efforts of less experienced lenders. The results also indicate that the selling rate function increased over the study period, and there is seasonality in the data which is consistent with lenders attempting to limit holding costs.

Research limitations/implications

The study is limited to the experience of lenders in a single local market over a three year study period. Additional research to determine if similar results apply in other markets would be a valuable addition to the literature.

Practical implications

While foreclosure is not a desirable outcome for any of the parties involved in a mortgage loan, the paper's results offer a bit of good news for lenders. The results are consistent with organizational learning theory which posits that experience should enhance performance. Given predictions that the mortgage crisis has not yet run its full course, lenders' performance in disposing of repossessed houses is likely to continue to improve.

Originality/value

This is the first study to apply the proportional hazard model to the study of foreclosed houses. This technique offers an advantage over previously applied methodologies because it allows the researcher to include properties that lenders did not sell during the study period into the analysis. All previous efforts were limited to sold properties and this restriction may have biased the previous results.

Details

International Journal of Housing Markets and Analysis, vol. 5 no. 1
Type: Research Article
ISSN: 1753-8270

Keywords

Article
Publication date: 25 February 2014

James E. Larsen and Joseph W. Coleman

Researchers have previously examined, with mixed results, whether experience in the single-family house market enhances a buyer's bargaining power by comparing prices paid by…

369

Abstract

Purpose

Researchers have previously examined, with mixed results, whether experience in the single-family house market enhances a buyer's bargaining power by comparing prices paid by relatively young first-time buyers and experienced buyers. The present study aims to extend this basic line of inquiry, but the focus here is on both buyers and sellers at the other end of the age spectrum as the authors investigate the bargaining power of senior citizens (age 65 or older) in the single-family house market.

Design/methodology/approach

Hedonic regression is used to analyze approximately 6,200 transactions that occurred in Montgomery County, Ohio during the years 2007 through 2009.

Findings

No difference is discovered between prices paid for a single-family house by senior citizens and other buyers in the sample. However, senior citizens in this study sold property for 5.9 percent less than other sellers, ceteris paribus, suggesting that when they sold their homes, other factors put seniors at a bargaining power disadvantage.

Research limitations/implications

Data limitations prevent the authors from specifying the precise reasons underlying the results concerning senior house sellers, but numerous possibilities are presented. Testing whether the results apply in other local housing markets would be a valuable extension of this research, as would identification of the factors associate with any bargaining power imbalance.

Practical implications

The economic principle of substitution suggests that assets that provide identical utility should command identical prices, but for heterogeneous goods the relative bargaining power of the principals may be important in the price formation process. The present study offers interesting results that in the case of senior buyers support the law of one price, but in the case of senior sellers, bargaining power differences dominate.

Originality/value

This is the first study to investigate bargaining power in residential real estate markets by comparing transaction prices involving senior citizens and other buyers and sellers.

Details

International Journal of Housing Markets and Analysis, vol. 7 no. 1
Type: Research Article
ISSN: 1753-8270

Keywords

Article
Publication date: 5 October 2010

James E. Larsen and John P. Blair

The purpose of this paper is to empirically test whether residents' satisfaction with seven general purpose public services are capitalized in single‐family house prices. The…

581

Abstract

Purpose

The purpose of this paper is to empirically test whether residents' satisfaction with seven general purpose public services are capitalized in single‐family house prices. The public services investigated are: fire protection, paramedic services, police protection, trash removal, snow removal, street maintenance, and neighborhood parks.

Design/methodology/approach

The seven service satisfaction measures, derived from a public opinion survey, are grouped into three variables based on the city department responsible for providing the service and included in a hedonic regression of single‐family house transactions that occurred in Dayton, Ohio.

Findings

All three satisfaction variables are positively related to house price, providing evidence that intra‐jurisdictional differences in the nature of public services are capitalized through market processes.

Social implications

The strength of the satisfaction measures in the regression model suggests that efforts to improve citizen satisfaction may be an important component of local efforts to stabilize urban neighborhoods and improve property values.

Originality/value

The present study is the first to use transaction prices rather than assessed values to analysis multiple general public services simultaneously. Because almost all previous studies investigate multiple jurisdictions the present study is also fairly unique as it focuses on different locations within a single jurisdiction. The use of survey responses regarding resident satisfaction with public services represents an advance on previous measures of public service provision because it potentially reflects underlying motivations of buyers and sellers very directly.

Details

International Journal of Housing Markets and Analysis, vol. 3 no. 4
Type: Research Article
ISSN: 1753-8270

Keywords

Article
Publication date: 12 October 2010

John P. Blair and James E. Larsen

The purpose of this study is to test the hypothesis that neighborhoods characterized by satisfying social relationships among residents have higher housing prices than areas where…

643

Abstract

Purpose

The purpose of this study is to test the hypothesis that neighborhoods characterized by satisfying social relationships among residents have higher housing prices than areas where people are less satisfied with their neighbors.

Design/methodology/approach

A semi‐logarithm regression model is used to test whether the extent of satisfaction with neighbors is significantly related to transaction prices of houses in 59 neighborhoods in Dayton, Ohio.

Findings

The results are consistent with, and more specific than, previous studies linking social capital to neighborhood stabilization. Resident satisfaction with their neighbors is found to be an important determinant of property value controlling for housing characteristics.

Practical implications

The findings support stabilization and economic development strategies that seek to enhance social relationships in urban neighborhoods.

Originality/value

This study is the first effort to examine the impact of relations among neighbors on housing prices while controlling for traditional housing characteristics. The paper is an important step in unbundling the social capital concept and points policy makers in directions that can improve community property values.

Details

Journal of Place Management and Development, vol. 3 no. 3
Type: Research Article
ISSN: 1753-8335

Keywords

Article
Publication date: 27 May 2014

James E. Larsen and John P. Blair

The purpose of this study is to gauge and compare the impact of surface street traffic externalities on residential properties. Limited previous research indicates that negative…

1120

Abstract

Purpose

The purpose of this study is to gauge and compare the impact of surface street traffic externalities on residential properties. Limited previous research indicates that negative externalities dominate for single-family houses. Our objective is to verify that this result applies to our sample, and to determine if the same result extends to multi-unit rental properties.

Design/methodology/approach

Hedonic regression is used to analyze data from 9,680 single-family house transactions and 455 multi-unit rental properties to measure the influence of surface street traffic on the price of the two property types.

Findings

Houses located adjacent to an arterial street sold at a 7.8 per cent discount, on average, compared to similar houses located on collector streets. Limiting the analysis to houses adjacent to an arterial street (where traffic counts were available), price and traffic count are negatively related. The results for multi-unit rental dwellings are dramatically different. Multi-unit properties adjacent to an arterial street sold at a 13.75 per cent premium compared to similar properties on collector streets, and when limiting the analysis to properties on arterial streets, no significant relationship was detected between price and traffic volume.

Originality/value

This is the first empirical study of the influence of surface street traffic on both single-family houses and multi-unit rental residential property. Evidence is provided that traffic externalities impact the two types of properties quite differently. To the extent that this result applies to other locations, the authors suggest planners may be able to use such information to reduce the negative effect of traffic externalities on residential property associated with changes that will increase traffic flow.

Details

International Journal of Housing Markets and Analysis, vol. 7 no. 2
Type: Research Article
ISSN: 1753-8270

Keywords

Content available
Article
Publication date: 12 October 2010

Cathy Parker, John Byrom, Gareth Roberts and Simon Quin

426

Abstract

Details

Journal of Place Management and Development, vol. 3 no. 3
Type: Research Article
ISSN: 1753-8335

Abstract

Details

The Handbook of Road Safety Measures
Type: Book
ISBN: 978-1-84855-250-0

1 – 10 of 819