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

  • 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)

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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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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