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Housing vintage and price dynamics

Author

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  • Rolheiser, Lyndsey
  • van Dijk, Dorinth
  • van de Minne, Alex

Abstract

The vintage of a home often refers to a period-specific collection of architectural characteristics, materials, and quality. Due to age, cost of materials and construction, some vintages may not be easily reproduced — effectively rendering them supply constrained. More conventional sources of supply constraints like high levels of land use regulation influence the risk and reward profiles of homes. Are similar supply constraint-induced dynamics associated with particular vintages? In other words, does the vintage of a house influence its price dynamics? Using residential property transaction data from the Netherlands spanning 2000–2017, we construct relative price indexes for three vintages. A repeat sales model with granular location × year fixed effects and time varying maintenance controls allows for the identification of the effect of vintage on price dynamics. In general, older and more architecturally desirable vintages (pre-1900 and 1900–1945) display larger returns. From a practical point of view, the vintage driven variation in price dynamics we observe has implications for institutions concerned with modeling real estate returns and risk.

Suggested Citation

  • Rolheiser, Lyndsey & van Dijk, Dorinth & van de Minne, Alex, 2020. "Housing vintage and price dynamics," Regional Science and Urban Economics, Elsevier, vol. 84(C).
    • Handle: RePEc:eee:regeco:v:84:y:2020:i:c:s0166046220302544
    DOI: 10.1016/j.regsciurbeco.2020.103569
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    Cited by:

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    5. Brian J. Asquith & Margaret C. Bock, 2022. "The Case for Dynamic Cities," Upjohn Working Papers 22-373, W.E. Upjohn Institute for Employment Research.

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    More about this item

    Keywords

    Housing vintage; Price dynamics; Supply constraints; Structural time series;
    All these keywords.

    JEL classification:

    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General

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