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Another Look at Effects of “Adults-Only” Age Restrictions on Housing Prices

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  • Charles Carter
  • Zhenguo Lin
  • Marcus Allen
  • William Haloupek

Abstract

This study reexamines the price effects of age restrictions on housing prices. Our data cover a period when the housing market is taking a steep downturn. We argue that, when housing prices are falling, seniors are more likely to avoid investing in housing for at least two reasons. First, seniors are relatively more sensitive to their immediate equity loss than younger homeowners, mainly due to the limited remaining lifetime over which they can afford to wait; second, age-restriction acts as a luxury good, with seniors not willing to pay for reduction in neighborhood uncertainty, eliminating buyer demand for this segment of the population. If this “larger demand loss” outweighs the positive externality of the reduction in neighborhood uncertainty during the market downturn, we would observe that age-restrictions reduce property values. Using data from Broward County, Florida for the years of 2005–2007, we find a significant discount in residential condominium prices due to age-restrictions. In particular, we find that imposing age-restriction on properties decreases housing prices by 17.9% during the period May 2005 to April 2006, while the discount is worse, 22.7%, during the later period May 2006 to May 2007. Copyright Springer Science+Business Media, LLC 2013

Suggested Citation

  • Charles Carter & Zhenguo Lin & Marcus Allen & William Haloupek, 2013. "Another Look at Effects of “Adults-Only” Age Restrictions on Housing Prices," The Journal of Real Estate Finance and Economics, Springer, vol. 46(1), pages 115-130, January.
    • Handle: RePEc:kap:jrefec:v:46:y:2013:i:1:p:115-130
    DOI: 10.1007/s11146-011-9317-0
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    References listed on IDEAS

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    1. Karl L. Guntermann & Seongman Moon, 2002. "Age Restriction and Property Values," Journal of Real Estate Research, American Real Estate Society, vol. 24(3), pages 263-278.
    2. Zhenguo Lin & Yingchun Liu & Vincent W. Yao, 2010. "Ownership Restriction and Housing Value: Evidence from American Housing survey," Journal of Real Estate Research, American Real Estate Society, vol. 32(2), pages 201-220.
    3. Hughes, William T, Jr & Turnbull, Geoffrey K, 1996. "Restrictive Land Covenants," The Journal of Real Estate Finance and Economics, Springer, vol. 12(1), pages 9-21, January.
    4. Ping Cheng & Zhenguo Lin & Yingchun Liu, 2008. "A Model of Time‐on‐Market and Real Estate Price Under Sequential Search with Recall," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 36(4), pages 813-843, December.
    5. Kelvin J. Lancaster, 1966. "A New Approach to Consumer Theory," Journal of Political Economy, University of Chicago Press, vol. 74(2), pages 132-132.
    6. Karl L. Guntermann & Gareth Thomas, 2004. "Loss of Age-Restricted Status and Property Values: Youngtown Arizona," Journal of Real Estate Research, American Real Estate Society, vol. 26(3), pages 255-276.
    7. Hughes, William Jr. & Turnbull, Geoffrey K., 1996. "Uncertain Neighborhood Effects and Restrictive Covenants," Journal of Urban Economics, Elsevier, vol. 39(2), pages 160-172, March.
    8. Marcus T. Allen, 1997. "Measuring the Effects of "Adults Only" Age Restrictions on Condominium Prices," Journal of Real Estate Research, American Real Estate Society, vol. 14(3), pages 339-346.
    9. A. Quang Do & G. Grudnitski, 1997. "The Impact on Housing Values of Restrictions on Rights of Ownership: The Case of an Occupant's Age," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 25(4), pages 683-693, December.
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    Cited by:

    1. Jay Weiser & Ronald Neath, 2016. "Private Ordering, Social Cohesion and Value: Residential Community Association Covenant Enforcement," International Real Estate Review, Global Social Science Institute, vol. 19(1), pages 1-26.

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