Street Name Fluency and Housing Prices
76 Pages Posted: 14 Oct 2019 Last revised: 17 Oct 2019
Date Written: October 15, 2019
This study investigates whether and how street name fluency affects housing prices using a rich sample of housing sale transactions in Sydney, Australia. We find homes with shorter street names (only one word) are associated with a premium of 11.48% than those with three or more words in the street names, implying fluency preference. Meanwhile, street names with fewer letters are priced with a -0.6% discount, that is, street names with fewer words but more letters (longer words) are preferred. Moreover, homes with unique street names have statistically higher prices of 1.4% (or A$9,481) than those with more common names, suggesting disfluency preference. We argue this is consistent with the consumption context effect as homes are special occasion purchases where exclusivity and uniqueness are desired. In addition, 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, further confirming the disfluency premium given exclusivity preference. Our results are robust to a matched sample approach utilizing pairs of similar home sales on different streets. 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
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