The Odd One Out? The Impact of Property Uniqueness on Selling Time and Selling Price

Abstract

We employ machine learning to develop measures of residential real estate uniqueness from written advertisements. These measures are exogenous from sales prices. We distinguish the effect of market uniqueness (compared to houses for sale at the same time) from the effect of universal uniqueness (compared to houses in the same sub-market) on sale prices and time-on-the-market (TOM). The hedonic models show that a one standard deviation increase in market uniqueness leads to a 13% ($48,490) increase in sale prices at the cost of delaying the transaction for 1.7 days, whereas a one standard deviation increase in universal uniqueness only leads to an 11% ($41,030)increase in sale prices at the cost of delaying the transaction for 3 days. We validated the impact of uniqueness on TOM using two hazard models. Our results highlight the importance of uniqueness and market timing in real estate.

Keywords: Natural Language Processing, Unsupervised Machine Learning, Soft In- formation, Time on the Market, Property Descriptions

JEL Classification: R31, G12, G14, C45