Risk Segmentation of American Homes: Evidence from Denver

Real Estate Economics, Forthcoming

Posted: 16 May 2012

See all articles by Thomas G. Thibodeau

Thomas G. Thibodeau

University of Colorado at Boulder - Leeds School of Business

Liang Peng

Smeal College of Business, The Pennsylvania State University

Multiple version iconThere are 2 versions of this paper

Date Written: May 16, 2012

Abstract

This paper empirically examines the segmentation of house price risk across 99 zip-code delineated neighborhoods in metropolitan Denver. The house price risk in each neighborhood is measured with the temporal variation of quarterly appreciation rates of the neighborhood house price index over the 2002 to 2007 period. Cross sectional regressions of neighborhood house price risk on the median household income and the percentage of population in poverty from the 2000 census data for the same neighborhood provide strong evidence that the house price risk is significantly higher in low-income/poor neighborhoods. Sub-period analyses further indicate that the risk segmentation exists in both a booming period (pre 2005:2) and a busting period (post 2005:3). The results indicate that homeownership can be a much riskier investment for low-income/poor households.

Keywords: home value risk, submarkets

Suggested Citation

Thibodeau, Thomas G. and Peng, Liang, Risk Segmentation of American Homes: Evidence from Denver (May 16, 2012). Real Estate Economics, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2061269

Thomas G. Thibodeau (Contact Author)

University of Colorado at Boulder - Leeds School of Business ( email )

Boulder, CO 80309-0419
United States

Liang Peng

Smeal College of Business, The Pennsylvania State University ( email )

University Park
State College, PA 16802
United States

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