Philipp Breidenbach (p), Patrick Thiel

Yuval Arbel

Starting in March 2020, the spread of Covid-19 caused fundamental societal changes and challenges. Besides a variety of negative effects of the pandemic, we focus on a specific side effect with partially positive impact. Due to the pandemic and the lockdown measures, the air traffic collapsed in March 2020. Residents, close by the airport who faced massive aviation noise pollution suddenly experienced “an event of silence”. We exploit this sudden decrease of noise to analyze whether the noise decrease affected housing prices for apartments located within the noise contour of German airports. To derive causal estimates, we exploit a two-way fixed effects model using apartments in the proximity of the airport. We argue (and empirically show) that the control regions do not differ from the treated ones. While the pandemic was initially expected to affect the noise level only temporarily, the course of the pandemic illustrated a permanent shock through, for example, the rise of virtual meetings. Our results strongly support our hypothesis. While there is basically no effect on apartment prices before the first lockdown, we observe a price increase of 3% after the lockdown when it became obvious that the aviation sector will not recover swiftly. The effect is even stronger in the first half of 2021 (5%). For those locations exposed to high noise levels (before the pandemic), the effect even peaks at 8%. The paper contributes to the literature in two ways: First, the change of pollution is truly exogenous without any announcement or selection problems which typically evolve in similar papers regarding disamenities and housing prices. Second, in contrast to most evaluation showing that the erection of a disamenity affects prices negatively, we show the opposite effect. Locations, which permanently suffered from pollution in the past, are able to immediately catch up again, once the pollution is alleviated. This is good news for urban planning since local environmental policies seem to be meaningful.

Rafael González-Val (p)

Philipp Breidenbach

In this paper, we study the evolution of the Spanish foreclosures rates (defined as the number of judicial foreclosures per 1,000 inhabitants) across the 50 Spanish provinces (NUTS III regions) during the period 2001(Q1) to 2019(Q4), using a cluster algorithm. This methodology allows us to determine the existence of foreclosures convergence among the Spanish provinces. We use the Phillips and Sul (2007, 2009) panel convergence method.
Results show that the Spanish province-level foreclosures rates do not converge in only one convergence club; rather, we identify ten foreclosures convergence groups when all the period is considered. Nevertheless, during this period there was a major negative shock, the global financial crisis in 2008. As a consequence, there was a dramatic increase in foreclosures in all regions. The main governmental response to this crisis was an important change in legislation, the legal reform passed in 2012 to protect mortgage debtors. Under the new regime, it is difficult for low-income debtors who meet certain requirements to be evicted. To explore the possible effects of these events, we split the sample in two sub-periods (pre-crisis, 2001(Q1)–2008(Q4), and post-crisis, 2009(Q1)–2019(Q4)). We observe strong differences in the number of groups and their composition when using the entire sample and the post-crisis period. Surprisingly, in the post-crisis period no club classification is obtained, as all provinces are classified in the same club. Therefore, there were different paths across regions before the crisis, but after the shock foreclosures rates in all provinces converged to the same path.
Supplementary analysis of the possible factors related to the club classification in the pre-crisis period is carried out. Furthermore, the cluster analysis is also applied to the loans rate (defined as the number of mortgage loans per 1,000 inhabitants) for the period 2007(Q1) to 2019(Q4). This time data is only available for the post-crisis period. Results support convergence in loans rates within six convergence clubs, pointing to six different loans rate patterns across the Spanish regions.

Yuval Arbel (p), Chaim Fialkoff, Amichai Kerner

Rafael González-Val

Background: Numerous studies have compared self evaluation and market values of apartments by employing hedonic regressions. Most of these studies demonstrated that self evaluation of apartments are typically overly optimistic. Yet, none of these studies explored the relationship between self-evaluation of apartments and obesity as a proxy for self esteem, particularly among women. Previous empirical evidence suggests weight discrimination against women in employment and income, education and romantic relationships. Following the influence of western values and norms regarding a slim body image of women and the implications of these social obesity penalties, one would anticipate a lower self evaluation of apartment value among obese women. Another strand of the literature shows that compared to men, women are more conservative financial investors. Objectives: To explore gender differences in self-evaluation of apartments with respect to BMI (= WEIGHT:HEIGHT2=kg:meter2,where BMI ≥ 30 is defined as obese person) as a proxy for self esteem. In an economic rational domain, housing price evaluations are not expected to be influenced by personal characteristics (such as gender, wealth, employment marital and immigration status, number of children) and psychological features of the evaluator. Consequently, the current study is closely related to the literature that deals with real estate and behavioral finance and economics. Methods We analyze a representative sample of the Israeli population, obtained from the 2015–2016 longitudinal survey carried out by the Israeli Central Bureau of Statistics (ICBS), where the responses of each individual were recorded twice (during 2015 and 2016). The survey includes information on weight and height of each family member, from which the BMI measure is calculated (weight ÷ height2), as-well-as apartment value, gender and a long list of economics and socio-demographic control variables, and apartment characteristics. To investigate this research question, we use a 2SLS methodology, and run the empirical model separately based on ethnic origin and gender. Results: Findings suggest that for both genders, BMI is negatively correlated with self-evaluation of apartments. Yet, compared to men, female self-evaluation of housing prices are more conservative and less influenced by BMI changes. This outcome is obtained despite the fact that as part of the modern western societies, Jewish Israeli women are more susceptible to weight gain. Research findings thus support the conclusion that the evaluation of women are more conservative and risk averse. Moreover, with respect to obesity, compared to males, the cognitive error in price evaluation is smaller among females.