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The Effects of Assumption Financing Across Housing Price Categories

Author

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  • Vinod B. Agarwal
  • Richard A. Philips

Abstract

This study employs a standard housing valuation model to analyze the capitalization of below‐market financing across housing price categories. The study also investigates the effect of secondary financing on housing prices and the effect of the expected holding period on discount capitalization. Using a randomly selected sample of 1981–82 housing transactions the study finds: the discount associated with below‐market financing is inversely related to the absolute level of housing prices; secondary financing bears no systematic relationship to housing values; and discount capitalization is inversely related to the expected holding period.

Suggested Citation

  • Vinod B. Agarwal & Richard A. Philips, 1985. "The Effects of Assumption Financing Across Housing Price Categories," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 13(1), pages 48-57, March.
  • Handle: RePEc:bla:reesec:v:13:y:1985:i:1:p:48-57
    DOI: 10.1111/1540-6229.00340
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    Cited by:

    1. Andres Jauregui & Alan Tidwell & Vivek Sah, 2019. "Sample Selection Approaches to Estimating and Allocating House Transaction Funding Price Differentials," The Journal of Real Estate Finance and Economics, Springer, vol. 58(3), pages 366-407, April.
    2. Michael LaCour-Little & Zhenguo Lin & Wei Yu, 2020. "Assumable Financing Redux: A New Challenge for Appraisal?," The Journal of Real Estate Finance and Economics, Springer, vol. 60(1), pages 3-39, February.
    3. G. Stacy Sirmans & C.F. Sirmans & Stanley D. Smith, 1987. "Creative Financing, House Prices, and Property Tax Inequities," Urban Studies, Urban Studies Journal Limited, vol. 24(5), pages 409-415, October.
    4. Mark A. Sunderman & Roger E. Cannaday & Peter F. Colwell, 1990. "The Value of Mortgage Assumptions: An Empirical Test," Journal of Real Estate Research, American Real Estate Society, vol. 5(2), pages 247-258.
    5. Richard A. Phillips & Eric M. Rosenblatt & James H. VanderHoff, 1992. "The Effect of Relative Pricing on the Fixed-Rate Mortgage Term Decision," Journal of Real Estate Research, American Real Estate Society, vol. 7(2), pages 187-194.
    6. Steven P. Mooney, 1990. "Cash Equivalency in Dichotomous Residential Markets," Journal of Real Estate Research, American Real Estate Society, vol. 5(1), pages 89-106.
    7. J. Allen Seward & Charles J. Delaney & Marc T. Smith, 1992. "An Empirical Analysis of Housing Price Appreciation in a Market Stratified by Size and Value of the Housing Stock," Journal of Real Estate Research, American Real Estate Society, vol. 7(2), pages 195-206.
    8. James E. Larsen & Won J. Park, 1989. "Non‐Uniform Percentage Brokerage Commissions and Real Estate Market Performance," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 17(4), pages 422-438, December.
    9. James E. Larsen, 1989. "Money Illusion and Residential Real Estate Transfers," Journal of Real Estate Research, American Real Estate Society, vol. 4(1), pages 13-19.

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