The impact of exogenous shocks on house prices: The case of the Volkswagen-emission scandal

Heiko Kirchhain and Joachim Zietz

ERES from European Real Estate Society (ERES)

Abstract: The study demonstrates that real estate prices react in a statistically significant manner to exogenous announcement effects that may affect regional employment opportunities. We analyze the impact of the announcement of the VW emissions scandal on 9/18/2015 on house prices in the vicinity of Chattanooga, TN, the location of the only current VW production plant in the United States using quantile regression-analysis. Our results indicate that the announcement of the VW emission scandal lowered average, quality adjusted sale prices by an average of 3.3 percent 31 to 60 days after the announcement and by 4.5 percent after 61 to 90 days. There are no statistically significant effects after 90 days. The quantile regressions show that in particular the mid-price range is negatively influenced by this exogenous shock. Our robustness checks show that the price impact increases with proximity to the production plant.

Keywords: Announcement effect; Hedonic house price model; Quantile Regression; VW emission scandal (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2018-01-01
New Economics Papers: this item is included in nep-ene, nep-eur and nep-ure
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Related works:
Journal Article: The Impact of Exogenous Shocks on House Prices: the Case of the Volkswagen Emissions Scandal (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:arz:wpaper:eres2018_204

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