Housing vintage and price dynamics

Lyndsey Rolheiser, Dorinth van Dijk and Alex van de Minne

Regional Science and Urban Economics, 2020, vol. 84, issue C

Abstract: The vintage of a home often refers to a period-specific collection of architectural characteristics, materials, and quality. Due to age, cost of materials and construction, some vintages may not be easily reproduced — effectively rendering them supply constrained. More conventional sources of supply constraints like high levels of land use regulation influence the risk and reward profiles of homes. Are similar supply constraint-induced dynamics associated with particular vintages? In other words, does the vintage of a house influence its price dynamics? Using residential property transaction data from the Netherlands spanning 2000–2017, we construct relative price indexes for three vintages. A repeat sales model with granular location × year fixed effects and time varying maintenance controls allows for the identification of the effect of vintage on price dynamics. In general, older and more architecturally desirable vintages (pre-1900 and 1900–1945) display larger returns. From a practical point of view, the vintage driven variation in price dynamics we observe has implications for institutions concerned with modeling real estate returns and risk.

Keywords: Housing vintage; Price dynamics; Supply constraints; Structural time series (search for similar items in EconPapers)
JEL-codes: C11 R21 R31 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:regeco:v:84:y:2020:i:c:s0166046220302544

DOI: 10.1016/j.regsciurbeco.2020.103569

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