IDEAS home Printed from https://ideas.repec.org/a/sae/urbstu/v28y1991i2p267-276.html
   My bibliography  Save this article

Rents, Selling Prices and Financing Premiums

Author

Listed:
  • G. Stacy Sirmans

    (Department of Insurance, Real Estate and Business Law, College of Business, The Florida State University, Tallahassee, FL 32306, USA)

  • C.F. Sirmans

    (Department of Finance, College of Business, Louisiana State University. Baton Rouge, LA, USA)

Abstract

This paper examines the effects of below-market financing on rents and selling prices of residential income properties. A recursive model is used to estimate rent and price equations in order to determine the effect of favourable financing on each variable. The results indicate that below-market financing has a negative effect on rent and a positive effect on selling price. Average monthly rent per unit with below-market financing is about $43 less than the average rent with current-market financing. The degree of capitalisation of the financing premium (as indicated by cash equivalence) in the selling price is less than 100 per cent. The average financing premium reflected in the selling price is $4818. Various factors, including differences in marginal and average costs and leverage effects, are presented to explain these results.

Suggested Citation

  • G. Stacy Sirmans & C.F. Sirmans, 1991. "Rents, Selling Prices and Financing Premiums," Urban Studies, Urban Studies Journal Limited, vol. 28(2), pages 267-276, April.
  • Handle: RePEc:sae:urbstu:v:28:y:1991:i:2:p:267-276
    as

    Download full text from publisher

    File URL: http://usj.sagepub.com/content/28/2/267.abstract
    Download Restriction: no

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Do, A. Quang & Sirmans, C. F., 1994. "Residential Property Tax Capitalization: Discount Rate Evidence From California," National Tax Journal, National Tax Association;National Tax Journal, vol. 47(2), pages 341-348, June.
    2. Do, A. Quang & Sirmans, C. F., 1994. "Residential Property Tax Capitalization: Discount Rate Evidence from California," National Tax Journal, National Tax Association, vol. 47(2), pages 341-48, June.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:urbstu:v:28:y:1991:i:2:p:267-276. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (SAGE Publications). General contact details of provider: http://www.gla.ac.uk/departments/urbanstudiesjournal .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.