Housing Yields

Stefano Colonnello, Roberto Marfè and Qizhou Xiong

Carlo Alberto Notebooks from Collegio Carlo Alberto

Abstract: We build a granular dataset of residential property yields using rental and sale listings from a major German real estate platform. Equipped with more than 1.5 million property-level rent-to-price ratios, we document a novel heterogeneity puzzle. About one-third of dispersion in yields can be explained neither by an extensive array of property-specic observable features, nor by accounting for any possi- ble below-zip code-level time-varying factor through a richxed effects structure. Unexplained yield heterogeneity is sizable and economically signicant. Whereas property yields predict returns and rent growth rates, we show that their time-series variation largely originates at a highly local level. Our evidence may point to the importance of heterogeneity in investors' beliefs and preferences, as opposed to a battery of alternative explanations for which we directly test.

Keywords: Housing; Rent-to-Price Ratio; Geographic Heterogeneity (search for similar items in EconPapers)
Pages: 85 pages
Date: 2024
New Economics Papers: this item is included in nep-ure
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Working Paper: Housing Yields (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:cca:wpaper:716

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