The Impact of Property Condition Disclosure Laws on Housing Prices: Evidence from an Event Study Using Propensity Scores
AbstractWe examine the impact of seller's Property Condition Disclosure Law on the residential real estate values. A disclosure law may address the information asymmetry in housing transactions shifting of risk from buyers and brokers to the sellers and raising housing prices as a result. We combine propensity score techniques from the treatment effects literature with a traditional event study approach. We assemble a unique set of economic and institutional attributes for a quarterly panel of 291 US Metropolitan Statistical Areas (MSAs) and 50 US States spanning 21 years from 1984 to 2004 is used to exploit the MSA level variation in house prices. The study finds that the average seller may be able to fetch a higher price (about three to four percent) for the house if she furnishes a state-mandated seller.s property condition disclosure statement to the buyer. When we compare the results from parametric and semi-parametric event analyses, we find that the semi-parametric or the propensity score analysis generals moderately larger estimated effects of the law on housing prices.
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Bibliographic InfoArticle provided by Springer in its journal The Journal of Real Estate Finance and Economics.
Volume (Year): 45 (2012)
Issue (Month): 1 (June)
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Web page: http://www.springerlink.com/link.asp?id=102945
Property condition disclosure; Housing price index; Propensity score matching; Event study;
Other versions of this item:
- Anupam Nanda & Stephen L. Ross, 2008. "The Impact of Property Condition Disclosure Laws on Housing Prices: Evidence from an Event Study using Propensity Scores," Working papers 2008-39, University of Connecticut, Department of Economics.
- C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
- K11 - Law and Economics - - Basic Areas of Law - - - Property Law
- L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services
- R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
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