Information, Search, and House Prices: Revisited

Ihlanfeldt, Keith R.; Mayock, Tom

doi:10.1007/s11146-010-9282-z

Cited by 51 publications

(61 citation statements)

References 9 publications

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“…In contrast to this earlier literature, more recent work on housing prices suggests there are distance effects in housing prices. Ihlanfeldt and Mayock (2012), for example, use a large number of single-family home sales in Florida and present evidence supporting the hypothesis that buyers with higher search costs pay a premium to acquire their homes. They also provide evidence supporting an anchoring hypothesis whereby buyers coming from high price markets pay more for their homes.…”

Section: Background Literaturementioning

confidence: 54%

Search Costs, Behavioral Biases, and Information Intermediary Effects

Ling

Naranjo

Petrova

2016

J Real Estate Finan Econ

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Buyers in commercial real estate markets often pay different prices for comparable properties. We document that distant commercial real estate buyers pay, on average, a premium relative to local buyers, controlling for individual property characteristics as well as time fixed-effects. We test the extent to which the sources of these observed premiums are a product of higher search costs/information asymmetry problems associated with distance (search cost channel) or a result of reference-dependence preference/anchoring based on the price levels in the investors' home market (behavioral biases channel). Our results employing 114,588 industrial, multi-family and office sale transactions during 1997-2011 suggest the observed price premiums are explained by distant investors who face higher search costs and are at an information disadvantage compared to investors located in closer proximity to the property. In contrast, anchoring plays a more muted role in explaining the observed premiums. These results are robust to econometric techniques that control for potential unobserved property characteristics that are correlated with investor attributes. We also test the extent to which informational intermediaries affect the observed premiums and find that the use of a broker increases the acquisition prices of buyers and decreases the disposition prices of sellers. This result is consistent with the incentive real estate agents have to convince sellers to dispose of their properties too quickly and to convince buyers to search less and therefore pay higher prices.

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Section: Background Literaturementioning

confidence: 54%

Search Costs, Behavioral Biases, and Information Intermediary Effects

Ling

Naranjo

Petrova

2016

J Real Estate Finan Econ

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“…In particular, the conventional wisdom is that local buyers have more information and lower search costs, so more bargaining power than out-of-town buyers. In addition, non-local buyers may face a time constraint to find a house to enable commuting to a new job or enrolling children in a local school that local buyers do not (Ihlanfeldt and Mayock, 2012). Thus, the bid function of each group of buyers will differ.…”

Section: Introductionmentioning

confidence: 99%

Asymmetric buyer information influence on price in a homogeneous housing market

2014

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Buyers often pay different prices for almost identical houses. One possible explanation is that there are information asymmetries in housing markets. Perhaps, buyers from outside the area have higher search costs and know less about the local market relative to that of current residents. In addition, an out-of-town buyer's price expectations could be anchored to market prices in their town of origin. This study examines the effect of buyer heterogeneity in the form of geographic location on house prices. We use a new data set to examine the non-local buyer information asymmetry and anchoring hypothesis. Using transaction data from a large development in Chengdu, China, our empirical models are estimated with relatively homogeneous units sold over a short period of time by one seller to minimise possible bias resulting from omitted variables. Our results support the hypotheses that non-local buyers pay higher prices and that high price anchoring occurs.

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“…Employees with this knowledge are well adjusted to function in the local context. Indeed, the benefits of possessing local knowledge have been demonstrated in several contexts other than paid employment: local buyers pay less for real estate (Ihlanfeldt & Mayock, ; Lambson, McQueen, & Slade, ); local entrepreneurs' ventures perform better (Dahl & Sorenson, ).…”

Section: Job Matching In Spacementioning

confidence: 99%

Location‐specific knowledge in spatial job search and its outcomes: An empirical investigation

Morkutė

2019

Papers in Regional Science

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This paper investigates how working location influences jobseekers' subsequent spatial job search. Further, it is assessed to what extent mobility between working regions is associated with wage growth. The results show that the working region functions as a prominent geographical anchor around which the new job search is focused. The jobseekers that do find a job far away from their old working region receive a small wage premium, but this premium disappears if selectivity is taken into account. It is concluded that employees demonstrate substantial stickiness to their working locations, and that this is motivated by asymmetry in search costs. No evidence was found that mobility between working regions in itself affects wages.

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Information, Search, and House Prices: Revisited

Cited by 51 publications

References 9 publications

Search Costs, Behavioral Biases, and Information Intermediary Effects

Search Costs, Behavioral Biases, and Information Intermediary Effects

Asymmetric buyer information influence on price in a homogeneous housing market

Location‐specific knowledge in spatial job search and its outcomes: An empirical investigation

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