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

20 Pages Posted: 1 Jun 2009

See all articles by Steven C. Bourassa

Steven C. Bourassa

Florida Atlantic University

Donald R. Haurin

Ohio State University (OSU) - Economics

Jessica L. Haurin

Stanford University

Martin Hoesli

University of Geneva - Geneva School of Economics and Management (GSEM); Swiss Finance Institute; University of Geneva - Research Center for Statistics; University of Aberdeen - Business School

Jian Sun

University of Louisville - School of Urban & Public Affairs

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Abstract

Although 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 three theories for guidance, one related to the optimal search strategy for sellers of atypical dwellings, another focusing on the bargaining process between a seller and potential buyers and the third relying on the concept of land leverage. 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

Bourassa, Steven C. and Haurin, Donald R. and Haurin, Jessica L. and Hoesli, Martin Edward Ralph and Sun, Jian, House Price Changes and Idiosyncratic Risk: The Impact of Property Characteristics. Real Estate Economics, Vol. 37, Issue 2, pp. 259-278, Summer 2009. Available at SSRN: https://ssrn.com/abstract=1411380 or http://dx.doi.org/10.1111/j.1540-6229.2009.00242.x

Steven C. Bourassa

Florida Atlantic University ( email )

777 Glades Road
Boca Raton, FL 33431
United States
5028077642 (Phone)

Donald R. Haurin

Ohio State University (OSU) - Economics ( email )

154 N. Oval Mall
1010G Derby Hall
Columbus, OH 43210-1172
United States
614-292-0482 (Phone)
614-292-9530 (Fax)

Jessica L. Haurin

Stanford University ( email )

Stanford, CA 94305
United States

Martin Edward Ralph Hoesli

University of Geneva - Geneva School of Economics and Management (GSEM) ( email )

40 Boulevard du Pont d'Arve
Geneva 4, 1211
Switzerland
+41 22 379 8122 (Phone)
+41 22 379 8104 (Fax)

Swiss Finance Institute

c/o University of Geneva
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CH-1211 Geneva 4
Switzerland

University of Geneva - Research Center for Statistics ( email )

Geneva
Switzerland

University of Aberdeen - Business School ( email )

Edward Wright Building
Dunbar Street
Aberdeen, Scotland AB24 3QY
United Kingdom
+41 22 379 8122 (Phone)
+41 22 379 8104 (Fax)

Jian Sun

University of Louisville - School of Urban & Public Affairs ( email )

426 W. Bloom Street
Louisville, KY 40292
United States

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