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House Price Changes and Idiosyncratic Risk: The Impact of Property Characteristics

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Author Info

  • Steven C. BOURASSA

    ()
    (School of Urban and Public Affairs, University of Louisville)

  • Donald R. HAURIN

    ()
    (Department of Economics Ohio State University)

  • Jessica L. HAURIN

    ()
    (Center for Real Estate Massachusetts Institute of Technology)

  • Martin HOESLI

    ()
    (HEC, University of Geneva, FAME and University of Aberdeen)

  • Jian SUN

    ()
    (School of Urban and Public Affairs, University of Louisville)

Abstract

While the average change in house prices is related to changes in fundamentals or perhaps market-wide bubbles, not all houses in a market appreciate at the same rate.The primary focus of our study is to investigate the reasons for these variations in price changes among houses within a market. We draw on two theories for guidance, one related to the optimal search strategy for sellers of atypical dwellings and the other focusing on the bargaining process between a seller and potential buyers. We hypothesize that houses will appreciate at different rates depending on the characteristics of the property and the change in the strength of the housing market. These hypotheses are supported using data from three New Zealand housing markets.

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Bibliographic Info

Paper provided by International Center for Financial Asset Management and Engineering in its series FAME Research Paper Series with number rp160.

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Date of creation: Nov 2005
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Handle: RePEc:fam:rpseri:rp160

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Keywords: Atypicality; Bargaining; Housing Risk; House Price Appreciation; Search Models;

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Citations

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Cited by:
  1. Juerg Syz & Paolo Vanini & Marco Salvi, 2008. "Property Derivatives and Index-Linked Mortgages," The Journal of Real Estate Finance and Economics, Springer, vol. 36(1), pages 23-35, January.
  2. Stephen D. Oliner & Joseph B. Nichols & Michael R. Mulhall, 2012. "Swings in commercial and residential land prices in the United States," Working Papers 35088, American Enterprise Institute.
  3. Bourassa, Steven C. & Hoesli, Martin & Scognamiglio, Donato & Zhang, Sumei, 2011. "Land leverage and house prices," Regional Science and Urban Economics, Elsevier, vol. 41(2), pages 134-144, March.
  4. Juan Contreras & Joseph Nichols, 2010. "Consumption responses to permanent and transitory shocks to house appreciation," Finance and Economics Discussion Series 2010-32, Board of Governors of the Federal Reserve System (U.S.).
  5. Katja Hanewald & Michael Sherris, 2011. "House Price Risk Models for Banking and Insurance Applications," Working Papers 201118, ARC Centre of Excellence in Population Ageing Research (CEPAR), Australian School of Business, University of New South Wales.

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