Aging and Housing Returns

Abstract

Older home sellers receive lower returns than younger home sellers. Homes sold by older people have fewer major renovations but higher rates of poor upkeep. Older sellers are also more likely to sell off-MLS (``pocket listings'') and to sell to investors, leading to lower prices. These patterns suggest that older sellers may be disproportionately disadvantaged by agents' incentive to maximize fees through generating high sales volume instead of maximizing sale prices. Age-related cognitive decline makes the elderly more vulnerable. For causal evidence, we show that reforms making pocket listings more transparent reduced both the prevalence of pocket listings and the magnitude of the age gap in returns. 

Keywords: Aging, Housing Returns, Real Estate Agents’ Incentives

JEL Classification: G5, J1, R00