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Superstar Returns

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  • Schularick, Moritz
  • Amaral, Francisco
  • Kohl, Sebastian
  • Dohmen, Martin

Abstract

This paper makes the first comprehensive attempt to study within-country heterogeneity of housing returns. We introduce a new city-level data set covering 15 OECD countries over 150 years and show that national housing markets are characterized by systematic spatial variation in housing returns. Total returns in large agglomerations are close to 100 basis points lower per year than in other parts of the same country. The excess returns outside the large cities can be rationalized as a compensation for higher risk, especially higher co-variance with income growth and lower liquidity. Real estate in diversified large agglomerations is comparatively safe.

Suggested Citation

  • Schularick, Moritz & Amaral, Francisco & Kohl, Sebastian & Dohmen, Martin, 2021. "Superstar Returns," CEPR Discussion Papers 16806, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:16806
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    Cited by:

    1. Hilber, Christian A. L. & Mense, Andreas, 2021. "Why have house prices risen so much more than rents in superstar cities?," LSE Research Online Documents on Economics 112668, London School of Economics and Political Science, LSE Library.

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    More about this item

    Keywords

    Asset returns; Housing risk; Superstar cities; Regional housing markets;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • N90 - Economic History - - Regional and Urban History - - - General, International, or Comparative
    • 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

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