Spillovers in Prices: The Curious Case of Haunted Houses
Review of Finance, 2020
70 Pages Posted: 24 Aug 2020 Last revised: 31 Aug 2020
Date Written: August 24, 2020
Exploiting the unique institutional setting of Hong Kong’s real estate market, we uncover a curious ripple effect of haunted houses on the prices of nearby houses. Prices drop on average 20% for units that become haunted, 10% for units on the same floor, 7% for units in the same block, and 1% for units in the same estate. Our study makes two contributions. First, we provide an estimate of a large negative spillover on prices caused by a quality shock. Second, we find that the demand shock rather than the fire sale supply shock explains most of the spillover.
Keywords: fire sales, negative spillovers, haunted houses
JEL Classification: D62, H23, R21, R31
Suggested Citation: Suggested Citation