Housing Price Dynamics 1
Paper Session
Friday, Jan. 3, 2025 8:00 AM - 10:00 AM (PST)
- Chair: Lily Shen, Clemson University
Who Values Neighborhood Diversity? Buyer Ethnicity and the Demand for Neighborhood Diversity
Abstract
Who values neighborhood diversity? This paper examines the relationship between buyer ethnicity, as revealed by their names, and what they pay to own houses in more ethnically diverse neighborhoods. It provides several contributions to the literature. It evaluates the most appropriate diversity measure out from among a set of reasonable alternatives motivated by prior studies. Using this measure, the empirical approach employs a simultaneous hedonic price and liquidity model of the two dimensions of equilibria in search markets to identify the extent to which diversity is capitalized into both price and ease of sale. We find ethnic clientele effects for neighborhood diversity per se as well as evidence of cultural connections between ethnic sellers and buyers. Nonetheless, houses in more diverse neighborhoods sell at a discount even when the buyer-seller ethnic mix is considered. Both buyer ethnicity and the cultural connection between sellers and buyers appear to matter, as they each modify the diversity discount paid by ethnic buyers.The Effect of Local Stock Market Participation on Local Housing Prices
Abstract
Leveraging geographical variation in stock market participation, our study establishes a negative causal link between aggregate stock returns and local residential property prices. Areas with higher market participation display reduced average housing prices after a positive aggregate equity market return. This finding exists across US counties and globally. This relationship emerges from a financial friction: post a bullish equity market, areas with higher market participation experience an increase in cash-only home purchases, which are discounted by an average of 11% (Reher and Valkanov, 2022) compared to mortgage-financed transactions, thus driving down local average home prices.Discussant(s)
Thao Le
,
Georgia State University
Robert French
,
Harvard Kennedy School
Lu Fang
,
Florida International University
Liuming Yang
,
Chinese University of Hong Kong
JEL Classifications
- R0 - General