Do Seller Disclosures Affect Property Values? Buyer Information and the Hedonic Model

By Jaren C. Pope. Land Economics, 2008

167 citations recorded by the source corpus.

The hedonic method is widely used to infer the value of environmental amenities that are bundled with real property. The interpretation of hedonic prices as marginal values requires that households are “fully informed.”Yet, there is evidence that buyers are often less informed than sellers. A graphical illustration in this study suggests that asymmetric information between buyers and sellers can affect hedonic prices. This intuition is confirmed by a quasi-random experiment that exploits spatial and information discontinuities stemming from a seller disclosure for flood zones. Results suggest a 4% decline in housing prices in flood zones after disclosures commenced. (JEL Q51, R52)

Subfields: Economics and Econometrics, Management, Monitoring, Policy and Law

View Paper: https://www.semanticscholar.org/paper/ee5c8de59a3efef39125f3871b0c6fd35346f4f9

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In Economics and Econometrics

1. Alois Stutzer
2. Bruno S. Frey
3. Simon Luechinger
4. Eric J. Horsch
5. D. Lewis
6. Christopher M. Fleming
7. C. Ambrey
8. Andrew Dickerson

In Management, Monitoring, Policy and Law

1. Eric J. Horsch
2. Bruno S. Frey
3. Alois Stutzer
4. D. Lewis
5. Simon Luechinger
6. N. Hanley
7. M. Roberts

Citations in the corpus

• The Life Satisfaction Approach to Environmental Valuation (2010, background): “Distorted risk perceptions may bias hedonic estimates in either direction since people may underestimate or exaggerate the risk of pollution.6 In contrast, incomplete information about prevailing pollution levels invariably attenuates price gradients towards zero (Pope 2008b).”
• The Effects of Aquatic Invasive Species on Property Values: Evidence from a Quasi-Experiment (2009, background): “Fixed neighborhood effects have recently emerged as an alternative to distancedefined weight matrices, and neighborhoods are typically defined by boundaries such as those used to define census tracts (e.g., see Pope 2008a, 2008b).”
• Quasi-Experiments and Hedonic Property Value Methods (2009, unknown): “pijt = xijtβ + γRISKjt + αi + λjt + εijt, (50)”