Street Name Fluency and Housing Prices

Abstract

This paper examines whether and how street name fluency affects housing prices using a rich sample of housing transactions in Sydney, Australia. We find street names with longer words are preferred, i.e., homes on street names with more letters are priced with a 0.6% premium. Homes with unique street names are sold 1.6% (or A$10,835) higher than those with more common names, implying disfluency and uniqueness preference. Moreover, homes with less fluent street names are valued more conditional on the street name is rare or the home is in the luxury price range. This is consistent with the consumption context effect in the psychology literature that in the context of special occasion high-end goods, lower fluency and greater uniqueness makes the products feel more desirable and valuable. While we show disfluency preference on aggregate, we also find evidence of fluency preference by non-English speaking buyers and for new developments. Preferences for royal names or popular words proxied by Google Trends are also documented. Overall, our findings shed light on understanding how name fluency affects the investment decision of special occasion goods such as real estate.

Keywords: name fluency, hedonic pricing, real estate, behavioral economics

JEL Classification: R00, O18, P22, R21