2015
DOI: 10.1007/s11146-015-9529-9
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Sample Selection Approaches to Estimating House Price Cash Differentials

Abstract: We extend the literature on house price cash differentials in important ways. First, our paper is the first to employ methods to correct for sample selection bias, using both switching regression and propensity score matching of cash vs. non-cash transactions. We use selection models to produce price counterfactuals for cash and noncash buyers. We also include both average treatment effect and a propensity score weighted selection models. From the selection models, we find that previous studies likely overstat… Show more

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Cited by 14 publications
(10 citation statements)
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References 28 publications
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“…Using a dynamic hedonic price model with a monthly panel data set, the authors show that mortgage rates are positively associated with housing price growth. Jauregui et al (2017) confirm these findings using a large data set of 9716 housing transactions in Franklin County, Ohio. They measure buyers’ expected discount for cash housing purchases.…”
supporting
confidence: 70%
“…Using a dynamic hedonic price model with a monthly panel data set, the authors show that mortgage rates are positively associated with housing price growth. Jauregui et al (2017) confirm these findings using a large data set of 9716 housing transactions in Franklin County, Ohio. They measure buyers’ expected discount for cash housing purchases.…”
supporting
confidence: 70%
“…The main idea is that matching treated (EPC of A/C rating) with control observations (EPC D/G rating) reduces the bias by controlling the observed heterogeneity between the treated group and the control group. The propensity score method has been used in this context in, for example, [25,26]. Jensen et al [8], however, addressed the selection bias problem differently.…”
Section: Methodsmentioning
confidence: 99%
“…Several papers have noted that the hedonic price model is limited in ruling out the confounding factors associated with cash-only transactions (Jauregui et al, 2017 ; Tidwell et al, 2018 ). For instance, Jauregui et al ( 2017 ) argue that cash payments are not random but are subject to systematic confounding factors including buyer characteristics, market conditions, as well as location.…”
Section: Theoretical Backgrounds and Prior Literaturementioning
confidence: 99%
“…In the previous literature, the cash-only price discount has been defined as the difference in the price of homes between homes purchased via a mortgage vs. cash (Asabere et al, 1992 ). Estimating the cash-only price discount is challenging due to the confounding factors associated with such transactions (Jauregui et al, 2017 ). For instance, cash-only transactions are more common for distressed and lower-priced homes, and the hedonic price model is not effective in ruling out such confounding factors (Jauregui et al, 2017 ; Tidwell et al, 2018 ).…”
Section: Introductionmentioning
confidence: 99%
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