House Price Changes and Idiosyncratic Risk: The Impact of Property Characteristics

FAME Research Paper No. 160

37 Pages Posted: 3 Jan 2006

See all articles by Steven C. Bourassa

Steven C. Bourassa

Florida Atlantic University

Donald R. Haurin

Ohio State University (OSU) - Economics

Jessica L. Haurin

Stanford University

Martin Hoesli

University of Geneva - Geneva School of Economics and Management (GSEM); Swiss Finance Institute; University of Aberdeen - Business School

Jian Sun

University of Louisville - School of Urban & Public Affairs

Multiple version iconThere are 2 versions of this paper

Date Written: November 2005

Abstract

While the average change in house prices is related to changes in fundamentals or perhaps market-wide bubbles, not all houses in a market appreciate at the same rate. The primary focus of our study is to investigate the reasons for these variations in price changes among houses within a market. We draw on two theories for guidance, one related to the optimal search strategy for sellers of atypical dwellings and the other focusing on the bargaining process between a seller and potential buyers. We hypothesize that houses will appreciate at different rates depending on the characteristics of the property and the change in the strength of the housing market.

These hypotheses are supported using data from three New Zealand housing markets.

Keywords: Atypicality, Bargaining,Housing Risk, House Price Appreciation, Search Models

JEL Classification: R31, R21, D83

Suggested Citation

Bourassa, Steven C. and Haurin, Donald R. and Haurin, Jessica L. and Hoesli, Martin Edward Ralph and Sun, Jian, House Price Changes and Idiosyncratic Risk: The Impact of Property Characteristics (November 2005). FAME Research Paper No. 160. Available at SSRN: https://ssrn.com/abstract=873451 or http://dx.doi.org/10.2139/ssrn.873451

Steven C. Bourassa

Florida Atlantic University ( email )

777 Glades Road
Boca Raton, FL 33431
United States
5028077642 (Phone)

Donald R. Haurin

Ohio State University (OSU) - Economics ( email )

154 N. Oval Mall
1010G Derby Hall
Columbus, OH 43210-1172
United States
614-292-0482 (Phone)
614-292-9530 (Fax)

Jessica L. Haurin

Stanford University ( email )

Stanford, CA 94305
United States

Martin Edward Ralph Hoesli (Contact Author)

University of Geneva - Geneva School of Economics and Management (GSEM) ( email )

40 Boulevard du Pont d'Arve
Geneva 4, 1211
Switzerland
+41 22 379 8122 (Phone)
+41 22 379 8104 (Fax)

Swiss Finance Institute

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

University of Aberdeen - Business School ( email )

Edward Wright Building
Dunbar Street
Aberdeen, Scotland AB24 3QY
United Kingdom
+41 22 379 8122 (Phone)
+41 22 379 8104 (Fax)

Jian Sun

University of Louisville - School of Urban & Public Affairs ( email )

426 W. Bloom Street
Louisville, KY 40292
United States

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