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The Pricing of Housing and Mortgage Services for First-Time Versus Repeat Homebuyers

This study examines efficiency in the pricing of housing and mortgage services across first-time and repeat homebuyers. A logit model is used to test a number of variables for significant differences across first-time buyers and repeat buyers for a sample of brokered real estate sales. The results show that the housing market is somewhat less than completely efficient in providing its services. The logit results for the adjustable-rate mortgage segment show that first-time homebuyers are more likely to be associated with a higher sale price per square foot and higher discount points than repeat buyers. The results show that first-time homebuyers tend to be younger and have less household income than repeat homebuyers. For the full sample of data, the results show that higher sale price/square foot ratios and lower downpayment/sale price ratios are more likely to be associated with first-time homebuyers. For the fixed-rate mortgage segment of the data, the only distinguishing variables are downpayment/sale price and buyer age (both lower for first-time homebuyers). Type of buyer cannot be distinguished by sale price/square foot, contract interest rate, discount points, and other variables. For the adjustable-rate mortgage segment of the data, type of buyer can be distinguished by sale sprice/square foot (higher for first-time buyers), downpayment/sale price (lower for first-time buyers), and discount points (higher for first-time buyers).

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File URL: http://pages.jh.edu/jrer/papers/pdf/past/vol10n01/v10p115.pdf
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Article provided by American Real Estate Society in its journal Journal of Real Estate Research.

Volume (Year): 10 (1995)
Issue (Month): 1 ()
Pages: 115-127

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Handle: RePEc:jre:issued:v:10:n:1:1995:p:115-127
Contact details of provider: Postal: American Real Estate Society Clemson University School of Business & Behavioral Science Department of Finance 401 Sirrine Hall Clemson, SC 29634-1323
Web page: http://www.aresnet.org/
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Order Information: Postal: Diane Quarles American Real Estate Society Manager of Member Services Clemson University Box 341323 Clemson, SC 29634-1323
Web: http://pages.jh.edu/jrer/about/get.htm Email:


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  1. Mankiw, N. Gregory & Weil, David N., 1989. "The baby boom, the baby bust, and the housing market," Regional Science and Urban Economics, Elsevier, vol. 19(2), pages 235-258, May.
  2. Joe Peek & James A. Wilcox, 1991. "A real, affordable mortgage," New England Economic Review, Federal Reserve Bank of Boston, issue Jan, pages 51-66.
  3. Lawrence D. Jones, 1989. "Current Wealth and Tenure Choice," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 17(1), pages 17-40.
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