The Journal of the Center for Real Estate Studies, edited and published by the Richard J Rosenthal Center for Real Estate Studies, has released its Spring Edition, volume 2, number 1. Included in the current issue are articles discussing the effects of interest rates on residential mobility, on the Japanese housing market, and on international commercial investment in the United States.
The first article, “Housing in the Recovery: Rising House Prices and the Easing of Quantitative Easing,” by Patric H. Hendershott, Jin Man Lee and James D. Shilling of DePaul University’s Institute for Housing Studies, briefs us on a research project, sponsored by the Rosenthal Center, designed to measure the extent to which homeowners may be “locked in” — their ability to sell and to move limited — by lost equity and, more importantly, by a rising interest rate environment. As the authors state: “…(I)f house prices fell sharply after homeowners heavily leveraged up, they would be unable to sell and obtain sufficient funds to make a down payment on another house. That is, their negative equity would lock them in. Second, if the interest rate on non-assumable fixed rate mortgages (FRMs) rose significantly, those with these mortgages would find moving from their current interest rate to what it would be on a new purchase to be too costly.” While a recovery of house prices is underway, which should unlock many households with recovered equity and increase turnover, the expected cessation of the quantitative easing (QE) program will raise interest rates and potentially creating a huge mortgage-rate lock-in. This research project has generated considerable media attention, with articles in major newspapers around the country. We are proud of the funding role the Richard J. Rosenthal Center for Real Estate Studies has played.
In his article, “The Characteristics and the Future of the Japanese Housing Market in Comparison with U.S. Housing Market,” Masayuki Nakagawa, of Nihon University, discusses plans on the part of the Japanese government to revitalize that country’s real estate market by introducing new policies, including renovation of the country’s real estate information systems on the model of the U.S.-style MLS. The article analyzes the causes of the small Japanese existing housing market and the effect of revitalization of the existing housing market within the whole of the housing market.
Jed Smith, Managing Director of NAR’s Quantitative Research group in Washington, and I offer a brief look at International Investment in Commercial Real Estate in the United States, entitled “Commercial Real Estate Market: Sales To International Buyers.” It is interesting to note that most international commercial purchases have been concentrated in a few larger “gateway” markets — notably Seattle, San Francisco, Los Angeles, New York, Boston, Washington, and Chicago. But, given the fierce competition for and low return on high quality trophy properties in the most desirable markets, a number of secondary markets are beginning to emerge as suitable for foreign investment, including Las Vegas, Jacksonville, Indianapolis, Tampa, Philadelphia, and Long Island. We develop a set of measures that may point to the qualities of markets that might attract foreign investment and suggest that there may be potential in a number of markets that, as yet, have not attracted international attention but that may, in the future, be attractive for commercial investment.
As always, the Journal of the Center for Real Estate Studies does not stop with our own research. We also include articles of interest for a broad range of readers in the industry. This time around: a peek back into the history of our industry and profession. Mary Martinez-Garcia, RCE, REALTOR® University Librarian, and Kate Stockert, Information & Web Content Specialist at NAR Information Central, take a look at the economic recovery of the 1940s and “real estate professionals of the 1940s to see how they managed the recovery and identified opportunities for growth.” It is interesting to note, as the authors do, that “even without social media and the Internet, successful and enterprising REALTORS® of the 1940s found creative ways to promote and utilize (such) programs” as the FHA and the GI Bill.
Take a look. Enjoy the Journal here.