Link of the Day

Walk Score

Shadow on the Chinese Miracle

Related;
You have permission to think freely

The decoupling debate

Will East Asia suffer the US slowdown?

Crazy Property Prices

Developers throughout the city are now building more three- and four-bedroom units to meet the demand. The average sale price for a new three-bedroom condo is about $4 million, with apartments selling for as little as $1 million in Harlem and Brooklyn and for as much as $8 million on Park Avenue.

The scarcity, though, seems to be universal. “It’s not just the $2 million to $3 million apartments that are hard to come by,” said Bill Milvaney, a broker with Bellmarc Realty. “Even with $4 million, $5 million or $7 million to spend, we’re just not finding them out there.”

Recent studies of the market indicate just how strong it is for larger apartments. While the average sale price for studios and one- and two-bedroom apartments hasn’t changed much in the last year, the average price for three-bedrooms went up by nearly 18 percent, to $4.187 million, according to the latest market report released by Prudential Douglas Elliman. For four-bedrooms, the increase was even steeper: more than 36 percent, to $9.175 million...

Brokers agree that most of the demand comes from young families who in the past would have opted for the suburbs, where they can get much more living and outdoor space for their money. Census figures bear this out: the number of children under age 5 living in Manhattan grew by more than 32 percent from 2000 to 2005.

-In Search of the Elusive 3-Bedroom

Working Paper of the Day

Interesting working paper from the Fund-Land Distribution and Financial System Development;

Summary: Research on credit markets from developing economies, as well as work on the origin of institutions in general, has suggested that land inequality may play a role in determining financial development. In this paper we establish empirically that initial land inequality is a significant predictor of financial depth across countries, even while controlling for other predictors such as legal origin, ethnic fractionalization, and income inequality. To examine this relationship we have created a new measure of land distribution within countries that builds upon the work of Deininger and Squire (1998) by explicitly accounting for landlessness. In addition to being a significant predictor of financial development, land inequality is found to be uncorrelated with other fundamental characteristics of economies, suggesting its possible use in a wider range of research

Visual for the Day- Real Estate Prices

-“PRICE PEAKS AND VALLEYS” shows real estate prices from November 2005-November 2006;

"One way to understand where the housing slump has been hitting is to break the market down according to different price tiers. Judging by local data supplied by brokers (national data don’t provide a detailed breakdown), it seems that so far it has struck hardest in the middle. In Miami-Dade County for instance, where condominiums represent about two-thirds of the market and single-family homes one-third, the average price of a condo in the $600,000 to $800,000 range (the middle of the middle tier) was down 1 percent in November 2006 compared with November 2005. At the high end, with most properties ranging from $2 million to $4 million, the average price rose 15 percent over the same period. And at the lower end, for condos between $400,000 and $600,000, the average price rose 2 percent"

Muslims Should Know This

"after the Murder of filmmaker and journalist Theo van Gogh, house prices in neighborhoods with morethan 25% Muslims decreased with about 0.1 to 0.2 percent per week relativelyto the other neighborhoods in Amsterdam"

Via Stumbling and Mumbling, an interesting working paper-The Effect of the Theo van Gogh Murder on House Prices in Amsterdam by Pieter Gautier, Arjen Siegmann, Aico van Vuuren;

"This paper estimates the impact of the murder of film maker Theo van Gogh on November 2, 2004, on listed house prices in Amsterdam with a unique dataset. We use an hedonic-market approach to show that general attitudes towards Muslim minorities were negatively affected by the murder. Specifically, we test for an effect on listed house prices in neighborhoods where more than 25% of the people belong to an ethnic minority from a Muslim country (type I). Relative to the other neighborhoods, house prices in type I neighborhoods decreased in 10 months by about average 3%, with a widening gap over time. The results are robust to several adjustments including changes in the control group. There is no significant difference in the time it takes for houses to be sold in type I versus other neighborhoods. Finally, people belonging to the Muslim minority were more likely to buy and less likely to sell a house in a type I neighborhood after the murder than before"

One novelty of the paper;

"We use a difference-in-difference (DID) approach to identify the impact of the murder. This approach has become very popular in labor and development eco nomics. The only other paper that applies DID to the housing market is Abadie and Dermisi (2006). Many of the problems related to this method are less severe for the housing market. This is due to the fact that houses are fixed and cannot move between neighborhoods. Therefore, we do not have to worry about mobility between the treatment and control group (see for example Blundell and Costa-Dias, 2000). In addition, the murder can be regarded as an unanticipated and exogenous event. Difference-in-difference methods have often been applied to study policy changes where it is always questionable whether the policy changes are really exogenous. Still, serial correlation is a potential problem for reasons pointed out in (Bertrand, Duflo and Mullainathan, 2004). We deal with this in our robustness checks. Another fundamental problem in cross sectional neighborhood-effect studies is to distinguish between a neighborhood effect and the aggregation of individual effects: the so called reflection problem, see Manski (1993, 2000). However, we are not so much interested in identifying neighborhood effects but more in the effects of the Van Gogh murder (which can be treated as an unexpected event) on different neighborhoods."

Related;
Social Interaction and cost-benefit analyses in economics: Initial observations
Structural Analysis of Discrete Data and Econometric Applications (free downloadable book)
ECONOMIC ANALYSIS OF SOCIAL INTERACTIONS
Is Terrorism Eroding Agglomeration Economies in Central Business Districts? Lessons from the Office Real Estate Market in Downtown Chicago
How Much Should We Trust Differences-in-Differences Estimates?
Microdata Methods and Practice
Schelling's Spatial Proximity Model of Segregation Revisited

Beverly Hills of Moscow

A place where flats can cost several million dollars;

“Ostozhenka (pronounced ahs-TO-zhen-ka), once home to many artists and intellectuals, is now known in the parlance of real estate agents and their wealthy clients as the Golden Mile. In the last five years it has become a Kremlin-view Beverly Hills on the Moscow River. Its winding lanes are now home to modern multimillion-dollar penthouses, Ferraris, gourmet restaurants and bizarre crimes: last year a celebrity plastic surgeon was stabbed by roller skaters, and later died, in what appeared to be a roll-by contract killing...

Mr. Litoshik, 27, has a personal stake in its transformation: he lived, until recently, at Khilkov Pereulok 3, and is a leader of Leave Us Alone. As a journalist for the business newspaper Vedomosti, he is awed by what he says is a reported $33,000 per square meter price tag on apartments going up next door to his former home. “They’re not selling drugs, but they’re making much more money,” he said of developers who have converged on Ostozhenka.”