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

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Author Info

  • Steven Bourassa

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

  • Donald Haurin

    ()
    (Department of Economics, Ohio State University)

  • Jessica Haurin

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

  • Martin Hoesli

    ()
    (University of Geneva)

  • 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 Ohio State University, Department of Economics in its series Working Papers with number 07-03.

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Length: 33 pages
Date of creation: Jan 2007
Date of revision:
Handle: RePEc:osu:osuewp:07-03

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Postal: 410 Arps Hall 1945 North High Street Columbus, Ohio 43210-1172

Related research

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

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References

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Citations

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Cited by:
  1. 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.
  2. 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.
  3. 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.).
  4. 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.
  5. 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.

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