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

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Author Info
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)

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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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Publisher Info
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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Related research
Keywords: Atypicality; Bargaining; Housing Risk; House Price Appreciation; Search Models;

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Find related papers by JEL classification:
R31 - Urban, Rural, and Regional Economics - - Production Analysis and Firm Location - - - Housing Supply and Markets
R21 - Urban, Rural, and Regional Economics - - Household Analysis - - - Housing Demand
D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information

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References listed on IDEAS
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    Other versions:
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    Other versions:
  6. Dennis R. Capozza & Ryan D. Israelsen & Thomas A. Thomson, 2005. "Appraisal, Agency and Atypicality: Evidence from Manufactured Homes," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 33(3), pages 509-537, 09. [Downloadable!] (restricted)
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  21. Michel Glower & Donald R. Haurin & Patric H. Hendershott, 1995. "Selling Price and Selling Time: The Impact of Seller Motivation," NBER Working Papers 5071, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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    Other versions:
  23. John P. Harding & John R. Knight & C.F. Sirmans, 2003. "Estimating Bargaining Effects in Hedonic Models: Evidence from the Housing Market," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 31(4), pages 601-622, December. [Downloadable!] (restricted)
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    Other versions:
  26. Marjorie Flavin & Takashi Yamashita, 2002. "Owner-Occupied Housing and the Composition of the Household Portfolio," American Economic Review, American Economic Association, vol. 92(1), pages 345-362, March. [Downloadable!]
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