Beyond geography: house price covariance and socio-economic distance in homeownership decisions

Xintong Yang, Yichen Gao () and Qi Li
Additional contact information
Xintong Yang: Capital University of Economics and Business, International School of Economics and Management
Yichen Gao: Capital University of Economics and Business, International School of Economics and Management
Qi Li: Texas A&M University, Department of Economics

Empirical Economics, 2025, vol. 69, issue 5, No 14, 2927-2971

Abstract: Abstract This paper introduces a novel perspective on homeownership decisions, focusing on the interplay between house price covariance and socio-economic distance. Through a spatial equilibrium model with tenure choice, we highlight how high house price covariance, indicative of reduced socio-economic distance, increases migrants’ likelihood of homeownership in their destination cities by reducing associated uncertainties. Utilizing the Census data of China, we demonstrate that migrants, especially those with higher education and income levels, are more likely to own homes when there is a greater covariance in house prices between their origin and destination cities. This trend is closely linked to the reduced uncertainty stemming from socio-economic similarities. We then introduce a new socio-economic distance metric to capture similarities across Chinese cities and find a negative correlation between this metric and house price covariance. Our results indicate that migrants prefer homeownership in cities that are socio-economically closer to their origins, with this preference being particularly pronounced among the highly educated due to the reduced uncertainties linked to housing price covariance. This paper offers critical insights into the determinants of migrant homeownership, underscoring the importance of housing market dynamics and socio-economic proximity.

Keywords: Socio-economic distance; House price covariance; Migration; Homeownership decision (search for similar items in EconPapers)
JEL-codes: R12 R21 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s00181-025-02731-2 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:empeco:v:69:y:2025:i:5:d:10.1007_s00181-025-02731-2

Ordering information: This journal article can be ordered from
http://www.springer. ... rics/journal/181/PS2

DOI: 10.1007/s00181-025-02731-2

Access Statistics for this article

Empirical Economics is currently edited by Robert M. Kunst, Arthur H.O. van Soest, Bertrand Candelon, Subal C. Kumbhakar and Joakim Westerlund

More articles in Empirical Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().