Another Look at Effects of 'Adults-Only' Age Restrictions on Housing Prices

24 Pages Posted: 14 Oct 2011

See all articles by Charles C. Carter

Charles C. Carter

Florida Atlantic University

Zhenguo (Len) Lin

Florida International University (FIU) - Hollo School of Real Estate

Marcus T. Allen

Florida Atlantic University - Finance & Real Estate

William J. Haloupek

Independent

Multiple version iconThere are 2 versions of this paper

Date Written: October 10, 2010

Abstract

This study reexamines the price effects of age restriction on housing prices. Our data cover a period when the housing market is taking a steep downturn. We argue that, when housing prices are falling, seniors are more likely to avoid investing in housing for at least two reasons. First, seniors are relatively more sensitive to their immediate equity loss than younger homeowners, mainly due to the limited remaining lifetime over which they can afford to wait; Second, age-restriction acts as a luxury good, with seniors not willing to pay for reduction in neighborhood uncertainty, eliminating buyer demand for this segment of the population. If this 'larger demand loss' outweighs the positive externality of the reduction of the reduction in neighborhood uncertainty during the market downturn, we would observe that age-restrictions reduce property values. Using data from Broward County, Florida for the years of 2005 to 2007, we find a significant discount in residential condominium prices due to age-restrictions. In particular, we find that imposing age-restriction on properties decreases housing prices by 17.9% during the period May 2005 to April 2006, while the discount is worse, 22.7%, during the later period May 2006 to May 2007.

Keywords: age restricitions, housing prices

Suggested Citation

Carter, Charles C. and Lin, Zhenguo and Allen, Marcus Tillman and Haloupek, William J., Another Look at Effects of 'Adults-Only' Age Restrictions on Housing Prices (October 10, 2010). Journal of Real Estate Finance and Economics, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1943324

Charles C. Carter

Florida Atlantic University ( email )

Boca Raton, FL 33431
United States

Zhenguo Lin (Contact Author)

Florida International University (FIU) - Hollo School of Real Estate ( email )

Miami, FL 33199
United States
3057799248 (Phone)

Marcus Tillman Allen

Florida Atlantic University - Finance & Real Estate ( email )

2912 College Ave
Davie, FL 33314
United States
954-236-1063 (Phone)
954-236-1298 (Fax)

William J. Haloupek

Independent ( email )

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