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Matching in Housing Markets: The Role of Ethnic Social Networks

Author

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  • Sumit Agarwal
  • Hyun-Soo Choi
  • Jia He
  • Tien Foo Sing

Abstract

This paper investigates the role of ethnic matching between buyers and sellers in Singapore’s public housing market. We find that sellers sell homes in blocks with a high concentration of their own (other) ethnic group(s) at significant premiums (discounts). Chinese sellers earn 1.7% higher premiums when selling homes to Chinese buyers in high Chinese concentrations housing blocks, but Malay sellers accept 1.6% discounts from Malay buyers in the same blocks. We find that the high volume of within-ethnicity transactions with the price discounts is supported by the ethnic social networks, that is, through ethnicity-specialized real estate agents.Received May 3, 2017; editorial decision July 4, 2018 by Editor Stijn Van Nieuwerburgh.

Suggested Citation

  • Sumit Agarwal & Hyun-Soo Choi & Jia He & Tien Foo Sing, 2019. "Matching in Housing Markets: The Role of Ethnic Social Networks," The Review of Financial Studies, Society for Financial Studies, vol. 32(10), pages 3958-4004.
    • Handle: RePEc:oup:rfinst:v:32:y:2019:i:10:p:3958-4004.
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    File URL: http://hdl.handle.net/10.1093/rfs/hhz006
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    Cited by:

    1. Chica-Olmo, Jorge & Cano-Guervos, Rafael, 2020. "Does my house have a premium or discount in relation to my neighbors? A regression-kriging approach," Socio-Economic Planning Sciences, Elsevier, vol. 72(C).
    2. William N Goetzmann & Christophe Spaenjers & Stijn Van Nieuwerburgh, 2021. "Real and Private-Value Assets [Gendered prices]," The Review of Financial Studies, Society for Financial Studies, vol. 34(8), pages 3497-3526.
    3. Agarwal, Sumit & He, Jia & Sing, Tien Foo & Song, Changcheng, 2019. "Do real estate agents have information advantages in housing markets?," Journal of Financial Economics, Elsevier, vol. 134(3), pages 715-735.
    4. Lawrence Kryzanowski & Yanting Wu & Tingyu Zhou, 2023. "Conflicts of interest and agent heterogeneity in buyer brokerage," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 51(1), pages 130-169, January.
    5. Lepinteur, Anthony & Menta, Giorgia & Waltl, Sofie R., 2023. "Equal Price for Equal Place? Demand-Driven Racial Discrimination in the Housing Market," IZA Discussion Papers 16418, Institute of Labor Economics (IZA).
    6. Natalya Bikmetova & Geoffrey K. Turnbull & Velma Zahirovic‐Herbert, 2023. "Ethnicity in housing markets: Buyers, sellers and agents," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 51(1), pages 196-232, January.
    7. Yi Fan & Maggie Rong & Wayne Xinwei Wan & Zhenping Wang, 2023. "A Tale of Two Cities: Mainland Chinese Buyers in the Hong Kong Housing Market," Review of Finance, European Finance Association, vol. 27(6), pages 2205-2232.
    8. Dai, Tianran & Schiff, Nathan, 2023. "The structure and growth of ethnic neighborhoods," Journal of Urban Economics, Elsevier, vol. 137(C).
    9. Daniel Broxterman & Tingyu Zhou, 2023. "Information Frictions in Real Estate Markets: Recent Evidence and Issues," The Journal of Real Estate Finance and Economics, Springer, vol. 66(2), pages 203-298, February.
    10. Deserina Sulaeman & Johan Sulaeman, 2022. "The Effect of Social Media on the Ethnic Dynamics in Donations to Disaster Relief Efforts," Sustainability, MDPI, vol. 14(19), pages 1-16, September.
    11. Lin, Zhenguo & Liu, Yingchun & Xie, Jia, 2024. "Market distortions with collusion of agents," Journal of Banking & Finance, Elsevier, vol. 162(C).
    12. Agarwal, Sumit & Kuang, Weida & Wang, Long & Yang, Yang, 2024. "The role of agents in fraudulent activities: Evidence from the housing market in Beijing," Journal of Urban Economics, Elsevier, vol. 142(C).
    13. Fang Zhang & Hang Zhang & Yun Zhang, 2023. "Trust premium in the second-hand housing market: evidence from the negotiation rate," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-15, December.

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