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Real Estate and Technology

Paper Session

Sunday, Jan. 3, 2021 12:15 PM - 2:15 PM (EST)

Hosted By: American Real Estate and Urban Economics Association
  • Chair: Tomasz Piskorski, Columbia University

E-commerce and Commercial Real Estate Markets

Jeonghyun Lee Chung
,
Georgia State University

Abstract

Using Amazon's establishment of a fulfillment center (FC) as a proxy for e-commerce presence, this paper investigates the impact of e-commerce expansion on commercial real estate markets. I find that retail property values in the treatment counties increase by 5.2% on average relative to the control counties following opening of a FC. I find evidence that employment, wages, and the number of businesses in transportation and warehouse sector increase significantly following a FC opening. Changes in local labor statistics also indicate that retail trade industry receives a positive spillover effect from the FC opening. However, I find limited evidence of the substitution effect between traditional retail stores and e-retailers. The retail property market experiences a positive bump in rental rate, occupancy rate, and transaction volume. The positive effect is stronger in areas where FC workers are more likely to reside, i.e., those in high density, with low income, younger population and more renters, but insignificant elsewhere. These results suggest that the income effects driven by a FC establishment dominate the substitution effects. These findings provide important evidence about cost-benefit analysis of local governments' effort to recruit e-commerce firms.

Technology Breakthrough in the Housing Market: A Case of iBuyers

Liuming Yang
,
Georgia State University

Abstract

This paper studies the impact of iBuyers in the housing market. An iBuyer is defined as a company or investor that uses technology to make quick cash offers on houses. Starting in 2014, these firms have disrupted the traditional home selling process by making it much faster and more convenient. We observe there exists a market segmentation between iBuyers’ market and other investors’ market. Unlike traditional investors who target on foreclosed houses, iBuyers tend to purchase non-distressed houses. iBuyers purchase houses at a 4.7% price discount for the convenience they provide to sellers. However, they do not sell at premium, which means iBuyers have a strong bargaining power at purchase side. The presence of iBuyers increases house prices in local markets by 3%. We hypothesize that composition of sellers' market shifted to more patient ones after the entry of iBuyers. This explanation is proven by the increase in time on market as well as listing price after the entry of iBuyers. Finally, we also find that iBuyers cause house prices in adjacent ZIP codes to increase, implying that they compete with and crowd out other homebuyers into neighboring markets.

Understanding Touristification in the Sharing Economy: Airbnb and the Housing Market

William Cheung
,
University of Auckland
Edward Yiu
,
University of Auckland

Abstract

The impact of the COVID-19 outbreak is feeding through the tourism value chain. While political and financial commitments are key to ensure a wider economic and social recovery, it is the best of times to reconsider the sector structurally in order to develop its resilience after the pandemic. Over the past decade, the global rise of home-sharing platforms such as Airbnb has catalysed the process of touristification’ in major cities. “Touristification” is a term which has been recently used to describe a process which leads to the transformation of a community into a tourism commodity. But less is understood about how such home-sharing platform affects housing submarkets. To understand the impacts of touristification on urban housing markets, we theorise the process using the spatial housing model, and hypothesise that the process could be associated with both gentrified (positive) and degentrified (negative) effects, ceteris paribus. We confirmed these two opposing forces of the Airbnb listing density on the house-type versus the apartment-type accommodation rents, using individual customer reviews as instrumental variables. Our findings imply that effective destination management should consider both the positive and the negative externalities which touristification renders.

The Effect of the Shared Economy on Crime: Evidence from Airbnb

Sergio Garate Alvarez
,
University of Mississippi
Anthony Pennington-Cross
,
Marquette University
Weihua Zhao
,
University of Louisville

Abstract

The rapid growth of Airbnb and the shared economy has made it critically important that we develop a better understanding of the impact (both intended and unintended) of the Airbnb market on other segments of the economy and the social fabric of neighborhoods. We empirically examine the impact of Airbnb on neighborhood crime. The results indicate that a 10% percent increase in the number of Airbnb hosts decreases neighborhood crime by over 2.6%. The impact is largest in locations with higher incomes and more expensive housing. The results are robust across a variety of controls for selection bias, endogeneity, and different measures of Airbnb activity.
Discussant(s)
Xiao Cen
,
Texas A&M University
Greg Buchak
,
Stanford University
Sophie Calder-Wang
,
University of Pennsylvania
Erica Jiang
,
University of Southern California
JEL Classifications
  • O3 - Innovation; Research and Development; Technological Change; Intellectual Property Rights