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

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