Risk Segmentation of American Homes: Evidence from Denver

31 Pages Posted: 14 Sep 2013

See all articles by Liang Peng

Liang Peng

Smeal College of Business, The Pennsylvania State University

Thomas G. Thibodeau

University of Colorado at Boulder - Leeds School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: Fall 2013

Abstract

This article 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 2002–2007 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 neighborhoods provide strong evidence that the house price risk is significantly higher in low‐income/poor neighborhoods. Subperiod 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.

Suggested Citation

Peng, Liang and Thibodeau, Thomas G., Risk Segmentation of American Homes: Evidence from Denver (Fall 2013). Real Estate Economics, Vol. 41, Issue 3, pp. 569-599, 2013. Available at SSRN: https://ssrn.com/abstract=2325746 or http://dx.doi.org/10.1111/reec.12005

Liang Peng (Contact Author)

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

University Park
State College, PA 16802
United States

Thomas G. Thibodeau

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

Boulder, CO 80309-0419
United States

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