Green versus Conventional Housing: Time-to-Sell and Willingness to Pay

34 Pages Posted: 21 Jun 2017  

Yuval Arbel

Carmel Academic Center

Danny Ben-Shahar

Tel Aviv University

Sharon Horsky

Hebrew University of Jerusalem - Jerusalem School of Business Administration

Naor Varsano

Bar Ilan University

Date Written: June 20, 2017

Abstract

This research is the first to explore the time-to-sell (TTS) and willingness to pay (WTP) in the context of green real estate. We employ unique data on transactions and household characteristics of owner-occupiers in newly developed green and conventionally built condominiums. We find that, after addressing the potential endogeneity between unit TTS and price, the average TTS of units in green, as compared to conventional, structures is significantly shorter. Considering developers’ financing cost, this shorter TTS is equivalent to an indirect price premium of 1.8%–5.3%. We further find that whenever the indirect green premium associated with TTS decreases, the green quality-adjusted price premium increases. Finally, we find an insignificant difference between the green and conventional structures in the correlation between household characteristics and the WTP. Our findings may serve both developers and policymakers in promoting green real estate construction.

Keywords: green housing, green premium, time-to-sell, willingness to pay

Suggested Citation

Arbel, Yuval and Ben-Shahar, Danny and Horsky, Sharon and Varsano, Naor, Green versus Conventional Housing: Time-to-Sell and Willingness to Pay (June 20, 2017). Available at SSRN: https://ssrn.com/abstract=2989500 or http://dx.doi.org/10.2139/ssrn.2989500

Yuval Arbel

Carmel Academic Center ( email )

4 Shaar Palmer Street
Haifa
Israel

Danny Ben-Shahar (Contact Author)

Tel Aviv University ( email )

Tel Aviv
Israel

Sharon Horsky

Hebrew University of Jerusalem - Jerusalem School of Business Administration ( email )

Mount Scopus
Jerusalem, 91905
Israel

Naor Varsano

Bar Ilan University ( email )

Ramat Gan
5290002
Israel

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