Neighborhood Externality Risk and the Homeownership Status of Properties

41 Pages Posted: 8 Jan 2014 Last revised: 15 Jan 2014

See all articles by Christian A. L. Hilber

Christian A. L. Hilber

London School of Economics (LSE) - Department of Geography and Environment; London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP); Spatial Economics Research Centre (SERC)

Date Written: October 14, 2004

Abstract

In contrast to corporate and institutional investors, single owner-occupiers cannot adequately diversify housing investment risk. Consequently, homeownership should be relatively less likely in places with higher housing investment risk. Using the American Housing Survey, it is documented that neighborhood externality risk, a major component of housing investment risk, substantially reduces the probability that a housing unit is owner-occupied, even when controlling for housing type and numerous location and household specific characteristics. The effects are quantitatively meaningful and change-in-change estimates suggest that the effects are causal.

Keywords: Homeownership, neighborhood externality risk, portfolio diversification

JEL Classification: D81, G11, R21, R31

Suggested Citation

Hilber, Christian A. L., Neighborhood Externality Risk and the Homeownership Status of Properties (October 14, 2004). Journal of Urban Economics, Vol. 57, No. 2, 2005, Available at SSRN: https://ssrn.com/abstract=2376097

Christian A. L. Hilber (Contact Author)

London School of Economics (LSE) - Department of Geography and Environment ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP) ( email )

Houghton Street
London WC2A 2AE
United Kingdom

Spatial Economics Research Centre (SERC) ( email )

United Kingdom

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