Superstar Returns? Spatial Heterogeneity in Returns to Housing

Francisco Amaral (), Martin Dohmen, Sebastian Kohl and Moritz Schularick ()
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Francisco Amaral: UZH - Universität Zürich [Zürich] = University of Zurich, Swiss Finance Institute
Martin Dohmen: Universität Bonn = University of Bonn
Sebastian Kohl: MPIfG - Max-Planck-Institut für Gesellschaftsforschung - Max-Planck-Gesellschaft, Freie Universität Berlin = Free University of Berlin, John F. Kennedy Institute
Moritz Schularick: ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, Kiel Institute for the World Economy - Kiel Institute for the World Economy

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Abstract: This paper makes the first comprehensive attempt to study within‐country heterogeneity of housing returns. We introduce a new city‐level data set covering 15 OECD countries over 150 years and show that national housing markets are characterized by systematic spatial variation in housing returns. Total returns in large agglomerations are close to 100 basis points lower per year than in other parts of the same country. Excess returns outside the large cities can be rationalized as compensation for higher risk, especially higher covariance with income growth and lower liquidity. Real estate in diversified large agglomerations is comparatively safe.

Date: 2025-08-19
Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-05448313v1
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Published in Journal of Finance, 2025, The Journal of Finance, 80 (5), pp.3057-3094. ⟨10.1111/jofi.13479⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05448313

DOI: 10.1111/jofi.13479

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