Sample Selection Approaches to Estimating House Price Cash Differentials

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• 作者：Andres Jauregui ; Alan Tidwell ; Diane Hite
• 关键词：Housing ; Cash discount ; Environmental economics ; Sample selection ; Valuation
• 刊名：The Journal of Real Estate Finance and Economics
• 出版年：2017
• 出版时间：January 2017
• 年：2017
• 卷：54
• 期：1
• 页码：117-137
• 全文大小：
• 刊物类别：Business and Economics
• 刊物主题：Regional/Spatial Science; Financial Services;
• 出版者：Springer US
• ISSN：1573-045X
• 卷排序：54

文摘

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 overstate the cash discount. Results from counterfactual tests examining cash discounts suggest amplified cash discounts in areas with close proximity to an environmental hazard; and also a pricing differential based on CBG level income, with purchasers in high income areas more likely to pay a cash premium compared to market participants in areas with comparably lower income, where a cash discount is detected. These results provide useful insights for market participants including real estate appraisers, brokers, and buyers and sellers of real estate.