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

Author

Listed:
  • 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.

Suggested Citation

  • Steven C. BOURASSA & Donald R. HAURIN & Jessica L. HAURIN & Martin HOESLI & Jian SUN, 2005. "House Price Changes and Idiosyncratic Risk: The Impact of Property Characteristics," FAME Research Paper Series rp160, International Center for Financial Asset Management and Engineering.
    • Handle: RePEc:fam:rpseri:rp160
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    More about this item

    Keywords

    Atypicality; Bargaining; Housing Risk; House Price Appreciation; Search Models;
    All these keywords.

    JEL classification:

    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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