The Impact of Labels on Real Asset Valuations

Yuliya Demyanyk, Luis López and Nitzan Tzur-Ilan

No 2504, Working Papers from Federal Reserve Bank of Dallas

Abstract: Expectations and sentiment of economic agents about financial prospects are both the drivers and the leading indicators of economic phenomena. This paper shows that neighborhood labels, frequently used in realtors’ property descriptions, have a causal impact on the demand for housing. Results indicate that appraised values, house prices and rents increased in minority neighborhoods upon removal of neighborhood labels. The underlying mechanism likely works through forming expectations about future growth in housing markets, as documented by the decrease in the rent-to-price ratio and lack of change in the creditworthiness of the neighborhood residents.

Keywords: real estate; valuations; house price expectations; housing demand; neighborhood (search for similar items in EconPapers)
JEL-codes: G12 G41 G50 O18 R31 (search for similar items in EconPapers)
Pages: 72
Date: 2025-01-15
New Economics Papers: this item is included in nep-ure
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DOI: 10.24149/wp2504

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