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Real Estate Indicators

This study examines key indicators in the real estate market, including housing affordability, debt measures, ownership and rent indicators, and price indexes. It analyzes the relationships between these indicators and economic and political events, as well as the impact of unemployment on the rental market.

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Real Estate Indicators

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  1. Real EstateIndicators Ing. David Slavata, Ph.D. VŠB-TU Ostrava FacultyofEconomics Czech Republic

  2. The basic indicators • housing affordability measures • housing debt measures • housing ownership and rent indicators • housing price indexes

  3. Housingaffordability Theindicatorinformshowaffordableisthehousingforfamilies. Itcompares house priceswithdisposableincomesoffamilies. • usedfor bank decisions in case ofmortgages • Deposit to income ratio (minimum requireddownpaymentformortgageexpressed in yearsofincome) DI = D/I • House price to income ratio HI = HP/I alternatively I/HP

  4. Increaseofbidwagesfrom 1894 – 1922 Czechoslovakia

  5. PI Ratio Index Ostrava

  6. HousingDebtMeasures Theindicatorinformswhatistheshareofhousingdebt to thevalueofthepropertyor to theincome • Housingdebt to service ratio HDS = (M + U + T) / I • Housingdebt to equity ratio HDE = MD / VP

  7. HousingDebt to Income ratio Indexed Ostrava

  8. HousingOwnership and Rent Indicators • Ownership ratio OR = O / T • Price to earnings ratio PE = HP / R – Ex • Price to rent ratio PR = HP / R • Gross rentalyield GRY = R / HP

  9. Gross RentalYields in Regions

  10. HousingPriceIndexes Calculatedfromdifferentqualitysources. Samples: • Askingprices • Actualpricepaid • Rentalprices • Price agreed at time of loan approval

  11. FlatAskingPrice Index Ostrava

  12. FlatAskingPrice Index and Asking Rent Index

  13. SR Index

  14. Basic Idea • Discussion with students • Are the countries with a high share of homeownership richer? • Is rental housing suitable only for poor? • Should the governments support homeownership? • Housing policy of Great Britain of 90 ´s, USA 2008, Eastern Europe of 90 ´s

  15. A. Oswald – The Housing Market and Europe´s Unemployment, 1999 • Low level of employment mobility of families in home ownership • Low level of regional development due the ownership clubs, who restrict technical infrastructure development.

  16. Researchquestions • Is there any economical relationship between numbers of adverts in newspapers and economical and political events? • Does the unemployment affect the share of flatsready for rent? • Is it possible to estimate unemployment by changing the share of rental dwellings in the market

  17. AdvertisementsAnalysis • Lidové Noviny from 28.2.1893 – 1.4.1945 • 312 newspapers • 5000 adverts were recorded • Recalculated as average to avoid seasonal fluctuations • To avoid identical advertisements the duration between searched edition was two months • The adverts were sorted into homogenous groups

  18. GeneticCodeofthe Real Estate Market – 51 years CZECHOSLOVAK REPUBLIC I WW Emigrat. G D II WW HABSBURG EMPIRE

  19. Themainsegmentsofrealestate market in 20 ´s and 30´s in Czechoslovakia • Flatsfor rent • Multiflathousesforsale • Farmhousesforsale • Familyhousesforsale

  20. Statistical estimation • Descriptive statistics • Pearson correlation coefficient • Ordinary least squares

  21. Timeshiftsbetweenunemployment and structureofhousing market

  22. ConfirmationofOsvald'spostulate: Employment mobility in rentalsectorissignificantly sensitive, whilethe mobility in familyhousing segment isinconclusive.

  23. New postulate: The share of rental sector predates future level of unemployment.

  24. Explanation • Maximization of tenant´s benefit • If the tenantloseshis joband is not able to find comparable, he leaves current rented flat • He maximizes his benefit if the day when leaves rental flat is his last day to have job. • Notice period (for rental agreement and for job agreement) force tenants to start the negotiation in advance (contract economy – Holmstrom, Hart)) • Maximization of landlord´s benefit • If he isinformed in advance the tenant will release the flat, he offers flat for rent it does not matter if it is still occupied.

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