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Recent Advancements in Real Estate Finance and Risk Management
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Recent Advancements in Real Estate Finance and Risk Management

A special issue of Journal of Risk and Financial Management (ISSN 1911-8074). This special issue belongs to the section "Financial Markets".

Deadline for manuscript submissions: 31 March 2025 | Viewed by 9232

Special Issue Editors

Dr. H. Swint Friday

E-Mail Website
Guest Editor
College of Business, Texas A&M University-Corpus Christi, Corpus Christi, TX 78412, USA
Interests: finance; property valuation and research; real estate; risk management
Dr. Dimitrios Koutmos

E-Mail Website
Co-Guest Editor
Department of Accounting, Finance, and Business Law, College of Business, Texas A&M University, Corpus Christi, TX 78412, USA
Interests: asset pricing; banking; blockchain; computational finance; data analytics; fintech
Special Issues, Collections and Topics in MDPI journals

Special Issue Information

Dear Colleagues,

The financial landscape of our global real estate economy is rapidly undergoing changes. These changes have been catalyzed, in part, by the COVID-19 pandemic, supply chain disruptions, high market volatility and uncertainty, corporations transitioning to remote workplace environments, and other forms of digital and global transformation, to name but a few. To broaden our understanding of some of these issues, this Call for Papers invites papers from a variety of disciplines that are both theoretical and/or empirical in nature. Topics of interest include, but are not limited to:

  • Role of technology and digitalization and/or big data analytics in real estate;
  • Securitization and financial engineering in real estate;
  • Financial risk management and its application to real estate price dynamics;
  • Housing shortages and mobility dynamics;
  • Planning, construction, and/or other housing market risks;
  • Housing and ownership characteristics across demographics;
  • Financing and mortgage rates;
  • The role of financial institutions in the global real estate economy;
  • Diversification properties of real estate investments;
  • Energy usage and efficiency analyses of property developments.

Dr. H. Swint Friday
Dr. Dimitrios Koutmos
Guest Editors

Manuscript Submission Information

Manuscripts should be submitted online at www.mdpi.com by registering and logging in to this website. Once you are registered, click here to go to the submission form. Manuscripts can be submitted until the deadline. All submissions that pass pre-check are peer-reviewed. Accepted papers will be published continuously in the journal (as soon as accepted) and will be listed together on the special issue website. Research articles, review articles as well as short communications are invited. For planned papers, a title and short abstract (about 100 words) can be sent to the Editorial Office for announcement on this website.

Submitted manuscripts should not have been published previously, nor be under consideration for publication elsewhere (except conference proceedings papers). All manuscripts are thoroughly refereed through a single-blind peer-review process. A guide for authors and other relevant information for submission of manuscripts is available on the Instructions for Authors page. Journal of Risk and Financial Management is an international peer-reviewed open access monthly journal published by MDPI.

Please visit the Instructions for Authors page before submitting a manuscript. The Article Processing Charge (APC) for publication in this open access journal is 1400 CHF (Swiss Francs). Submitted papers should be well formatted and use good English. Authors may use MDPI's English editing service prior to publication or during author revisions.

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Further information on MDPI's Special Issue polices can be found here.

Published Papers (6 papers)

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Research

12 pages, 285 KiB  
Article
Coastal Real Estate Vibes: An Analysis of the Association Between Coastal Residential Ownership and the Resident Occupant’s Risk Tolerance
by Leobardo Diosdado, Matthew Jaramillo, Eugene Bland and Christopher Wertheim
J. Risk Financial Manag. 2024, 17(11), 496; https://doi.org/10.3390/jrfm17110496 - 6 Nov 2024
Viewed by 417
Abstract
This study examines the association between the location, relative to the coast, of an individual’s primary residence and the homeowners’ risk tolerance. Utilizing data from the 2021 National Financial Capability Study and employing a probit model, we analyzed how varying risk tolerance levels [...] Read more.
This study examines the association between the location, relative to the coast, of an individual’s primary residence and the homeowners’ risk tolerance. Utilizing data from the 2021 National Financial Capability Study and employing a probit model, we analyzed how varying risk tolerance levels affect the likelihood of owning a home in a coastal ZIP code. The respondent’s risk tolerance was classified as high, medium, or low according to their self-reported willingness to take financial risks. Our results suggest that individuals with lower risk tolerances are less likely to own a home within a coastal ZIP code. Specifically, homeowners with medium-risk tolerance are 2.91% less likely, and those with low-risk tolerance are 3.17% less likely to own a primary residence in a coastal ZIP code when compared to those with high-risk tolerance. These results are statistically and economically similar when using a logit model. These findings are both statistically significant and align with economic theory. The analysis also included various demographic and socioeconomic factors, finding that age, income, and certain employment statuses influence coastal homeownership. This research contributes to the understanding of home ownership location choices and risk tolerance. Our results provide policymakers with insights into the risk characteristics of individuals who prefer coastal areas as their primary residences. This information can inform future policy decisions by highlighting the societal and economic implications of regulations related to residential coastal development. Full article
(This article belongs to the Special Issue Recent Advancements in Real Estate Finance and Risk Management)
20 pages, 1453 KiB  
Article
Explainable Machine Learning for Fallout Prediction in the Mortgage Pipeline
by Preetam Purohit and Amit Verma
J. Risk Financial Manag. 2024, 17(10), 431; https://doi.org/10.3390/jrfm17100431 - 27 Sep 2024
Viewed by 849
Abstract
This study examines mortgage loan fallout using data provided by a leading financial institution. By accurately predicting mortgage loan fallout, lenders can protect their bottom line, maintain financial stability, and contribute to a healthier economy. The paper employs various machine learning models to [...] Read more.
This study examines mortgage loan fallout using data provided by a leading financial institution. By accurately predicting mortgage loan fallout, lenders can protect their bottom line, maintain financial stability, and contribute to a healthier economy. The paper employs various machine learning models to predict mortgage fallout based on loan, market, property, and borrower characteristics. A large dataset of locked mortgage applications from a major U.S. lender was analyzed. The random forest model demonstrated superior predictive efficiency and stability. To understand the factors influencing mortgage fallout, the SHAP method, along with empirical analysis with logistic regression, was utilized to identify key determinants. The paper discusses the implications of these findings for mortgage lenders and future research. Full article
(This article belongs to the Special Issue Recent Advancements in Real Estate Finance and Risk Management)
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13 pages, 956 KiB  
Article
Investing in US Timberland Companies
by Jack Clark Francis and Ge Zhang
J. Risk Financial Manag. 2024, 17(6), 220; https://doi.org/10.3390/jrfm17060220 - 24 May 2024
Viewed by 1544
Abstract
Are common stocks issued by timberland companies a good investment? Portfolios of large US timberland corporations are compared to simultaneous investments in a diversified US common stock index. Over a 20-year sample period it turns out that the US timberland corporations, on average, [...] Read more.
Are common stocks issued by timberland companies a good investment? Portfolios of large US timberland corporations are compared to simultaneous investments in a diversified US common stock index. Over a 20-year sample period it turns out that the US timberland corporations, on average, perform about as well as the highly diversified US stock market index. It is surprising that the timberland companies do not outperform the stock market indexes because, in order to encourage tree planting, the US Congress has almost completely exempted timberland companies from paying federal income taxes. Furthermore, it is scientifically impossible to assess the value of the large amounts of photosynthesis that the timberland companies produce. As a result of these two ambiguities, it is difficult to state decisively that the timberland companies are better investments than a diversified portfolio of common stocks. However, valuing timberland companies is more practical than endeavoring to value the trees directly. Full article
(This article belongs to the Special Issue Recent Advancements in Real Estate Finance and Risk Management)
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10 pages, 264 KiB  
Article
High Risk, Constrained Return: Impact of Student Loans on Agricultural Real Estate
by Leobardo Diosdado, Donald Lacombe and Darren Hudson
J. Risk Financial Manag. 2024, 17(5), 176; https://doi.org/10.3390/jrfm17050176 - 24 Apr 2024
Viewed by 1058
Abstract
A farming household’s decision to continue producing agricultural commodities within the United States is influenced by a multitude of factors. Thus, this study seeks to examine whether the outstanding student loan balance of any member within a farming household may explain why the [...] Read more.
A farming household’s decision to continue producing agricultural commodities within the United States is influenced by a multitude of factors. Thus, this study seeks to examine whether the outstanding student loan balance of any member within a farming household may explain why the total number of acres devoted to the production of agriculture in the United States continues to decline. Panel data from the 2007–2009 Survey of Consumer Finances are analyzed via a fixed effect model to estimate the effect of outstanding student loan balances on farmland acreage owned, controlling for other factors like farm income, debt, and land prices. The results suggest that for each additional dollar of outstanding student loan debt, there is an associated decrease of 0.0064 acres in total farmland ownership. This suggests that student loan debt may also be a factor in the decline in real estate devoted to agriculture production. The estimated effect is both economically and statistically significant. This study contributes to the literature on the risks and constraints associated with farming households that own or seek to procure additional acres of agricultural producing real estate. Full article
(This article belongs to the Special Issue Recent Advancements in Real Estate Finance and Risk Management)
15 pages, 1475 KiB  
Article
The Diversification Benefits of Foreign Real Estate: Evidence from 40 Years of Data
by C. Mitchell Conover, Joseph D. Farizo, H. Swint Friday and David S. North
J. Risk Financial Manag. 2024, 17(4), 160; https://doi.org/10.3390/jrfm17040160 - 16 Apr 2024
Viewed by 1854
Abstract
We investigate the potential of global real estate to improve the long-term performance of a US equity portfolio, utilizing a recent dataset of 40 years’ worth of US stocks, US real estate, 13 foreign stock markets, and 13 foreign real estate markets across [...] Read more.
We investigate the potential of global real estate to improve the long-term performance of a US equity portfolio, utilizing a recent dataset of 40 years’ worth of US stocks, US real estate, 13 foreign stock markets, and 13 foreign real estate markets across diverse regions. Despite a modest performance in terms of risk and return, foreign real estate has consistently lower correlations with US stocks compared to foreign equities. Rolling correlation analysis indicates that foreign real estate markets remain relatively segmented compared to foreign equity, despite increasing financial market correlations over time. Efficient frontier analysis demonstrates that portfolios including foreign real estate consistently outperform those limited to US stocks and US real estate or those including foreign stocks, indicating the importance of foreign real estate in optimizing portfolio performance. Subperiod analysis reveals that foreign real estate retains its diversification benefits even in the latter, more integrated period. Our results are robust when using Conditional Value-at-Risk as a measure of risk. Overall, our findings highlight the persistent diversification benefits and superior risk-adjusted returns from incorporating foreign real estate into US equity portfolios. Full article
(This article belongs to the Special Issue Recent Advancements in Real Estate Finance and Risk Management)
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20 pages, 679 KiB  
Article
Evaluating the Performance of Real Estate Exchange-Traded Funds
by Davinder K. Malhotra
J. Risk Financial Manag. 2024, 17(1), 7; https://doi.org/10.3390/jrfm17010007 - 21 Dec 2023
Cited by 2 | Viewed by 2346
Abstract
This study examines the net monthly returns of real estate exchange-traded funds (ETFs) through various performance evaluation models and market situations. The results reveal that these ETFs generated positive alphas and outperformed benchmark indices in absolute returns. However, their performance varied across market [...] Read more.
This study examines the net monthly returns of real estate exchange-traded funds (ETFs) through various performance evaluation models and market situations. The results reveal that these ETFs generated positive alphas and outperformed benchmark indices in absolute returns. However, their performance varied across market conditions, demonstrating both outperformance and underperformance compared to U.S. and global stocks. During the COVID-19 pandemic, real estate ETFs displayed a decline, trailing behind U.S. and global equities in both absolute returns and risk-adjusted performance. This emphasized their vulnerability during economic crises. Utilizing the Carhart four-factor model, significant exposure of real estate ETFs to the stock market was observed. Moreover, an assessment of ETF portfolio managers’ skills indicated proficiency in security selection but limited capabilities in market timing. Full article
(This article belongs to the Special Issue Recent Advancements in Real Estate Finance and Risk Management)
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