The Effects of Visual Technology on Price Discovery for Residential Listings and Transactions
33 Pages Posted: 30 Jun 2021
Date Written: January 22, 2021
This paper examines the effect of visual technology on the price discovery process in listings of residential properties. We empirically model the effects of 360 virtual tours and drone video on four dimensions in price discovery — buyers’ arrival rate, sale probability, transaction prices and time-on-market — using a comprehensive dataset for the residential properties in Singapore. The analysis shows that the availability of virtual tours or drone video in a listing increases the arrival rate from potential buyers, the probability of a successful sale, and the selling price. These findings are consistent with the hypothesis that technologically enhanced tools improve the quality of information and the marketability of property. However, listings with virtual tours tend to be associated with longer marketing time, which is consistent with the prediction of the information overload hypothesis. This paper extends the housing and price discovery literature by examining how technologically-enabled new information affects property transactions.
Keywords: Visual technology, proptech, drone video, virtual tour, house prices, time-on-market, sales probability, price discovery
JEL Classification: R21
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