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Asymmetric buyer information influence on price in a homogeneous housing market

Author

Listed:
  • Xiaorong Zhou

    (Southwestern University of Finance and Economics, China)

  • Karen Gibler

    (Georgia State University, USA)

  • Velma Zahirovic-Herbert

    (The University of Georgia, USA)

Abstract

Buyers often pay different prices for almost identical houses. One possible explanation is that there are information asymmetries in housing markets. Perhaps, buyers from outside the area have higher search costs and know less about the local market relative to that of current residents. In addition, an out-of-town buyer’s price expectations could be anchored to market prices in their town of origin. This study examines the effect of buyer heterogeneity in the form of geographic location on house prices. We use a new data set to examine the non-local buyer information asymmetry and anchoring hypothesis. Using transaction data from a large development in Chengdu, China, our empirical models are estimated with relatively homogeneous units sold over a short period of time by one seller to minimise possible bias resulting from omitted variables. Our results support the hypotheses that non-local buyers pay higher prices and that high price anchoring occurs.

Suggested Citation

  • Xiaorong Zhou & Karen Gibler & Velma Zahirovic-Herbert, 2015. "Asymmetric buyer information influence on price in a homogeneous housing market," Urban Studies, Urban Studies Journal Limited, vol. 52(5), pages 891-905, April.
    • Handle: RePEc:sae:urbstu:v:52:y:2015:i:5:p:891-905
    DOI: 10.1177/0042098014529464
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    References listed on IDEAS

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    Cited by:

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    2. Orlando Gomes & João Frade, 2019. "“Fool me once, …”: deception, morality and self-regeneration in decentralized markets," Journal of Economics, Finance and Administrative Science, Emerald Group Publishing Limited, vol. 24(48), pages 312-326, April.
    3. Sauveur Giannoni & Olivier Beaumais & Caroline Tafani, 2019. "Price gap between non-local and local buyers on the farmland market: a potential outcome approach," Working Papers hal-02400305, HAL.

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