Do Seller Disclosures Affect Property Values? Buyer Information and the Hedonic Model
AbstractThe hedonic method is widely used to infer the value of environmental amenities that are bundled with real property. The interpretation of hedonic prices as marginal values requires that households are "fully informed."Yet, there is evidence that buyers are often less informed than sellers. A graphical illustration in this study suggests that asymmetric information between buyers and sellers can affect hedonic prices. This intuition is confirmed by a quasi-random experiment that exploits spatial and information discontinuities stemming from a seller disclosure for flood zones. Results suggest a 4% decline in housing prices in flood zones after disclosures commenced.
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Bibliographic InfoArticle provided by University of Wisconsin Press in its journal Land Economics.
Volume (Year): 84 (2008)
Issue (Month): 4 ()
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Web page: http://le.uwpress.org/
Find related papers by JEL classification:
- Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
- R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations
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- H. Allen Klaiber & V. Kerry Smith, 2009. "Evaluating Rubin's Causal Model for Measuring the Capitalization of Environmental Amenities," NBER Working Papers 14957, National Bureau of Economic Research, Inc.
- Christopher F. Parmeter & Jaren C. Pope, 2012. "Quasi-Experiments and Hedonic Property Value Methods," Working Papers 2012-7, University of Miami, Department of Economics.
- Gaetano Lisi & Mauro Iacobini, 2012. "Measuring the Housing Price Dispersion in Italy," Economics Bulletin, AccessEcon, vol. 32(1), pages 811-822.
- Kent Kovacs & Thomas Holmes & Jeffrey Englin & Janice Alexander, 2011. "The Dynamic Response of Housing Values to a Forest Invasive Disease: Evidence from a Sudden Oak Death Infestation," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 49(3), pages 445-471, July.
- Luc Anselin & Daniel Arribas-Bel, 2011. "Spatial Fixed Effects and Spatial Dependence," GeoDa Center Working Papers 1045, GeoDa Center for Geospatial Analysis and Computation.
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