The Impact of Property Condition Disclosure Laws on Housing Prices: Evidence from an Event Study using Propensity Scores

Anupam Nanda () and Stephen Ross

No 2008-39, Working papers from University of Connecticut, Department of Economics

Abstract: We examine the impact of seller's Property Condition Disclosure Law on the residential real estate values. A disclosure law may address the information asymmetry in housing transactions shifting of risk from buyers and brokers to the sellers and raising housing prices as a result. We combine propensity score techniques from the treatment effects literature with a traditional event study approach. We assemble a unique set of economic and institutional attributes for a quarterly panel of 291 US Metropolitan Statistical Areas (MSAs) and 50 US States spanning 21 years from 1984 to 2004 is used to exploit the MSA level variation in house prices. The study finds that the average seller may be able to fetch a higher price (about three to four percent) for the house if she furnishes a state-mandated seller.s property condition disclosure statement to the buyer. When we compare the results from parametric and semi-parametric event analyses, we find that the semi-parametric or the propensity score analysis generals moderately larger estimated effects of the law on housing prices.

Keywords: Property Condition Disclosure; Housing Price Index; Propensity Score Matching; Event Study (search for similar items in EconPapers)
JEL-codes: C14 K11 L85 R21 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2008-09
New Economics Papers: this item is included in nep-geo, nep-law and nep-ure
Note: Authors acknowledge helpful comments from John Clapp, Dennis Heffley, James Davis, Katherine Pancak, Thomas Miceli, and seminar participants at the University of Connecticut, Economics Brownbag Seminar Series, and 2006 AREUEA Doctoral Session in Boston. We would also like to thank Tim Storey (National Conference of State Legislatures), Daniel Conti (Bureau of Labor Statistics) for assistance with data, and Sascha Becker of University of Munich for assistance with STATA module on propensity score matching algorithm (written by Sascha Becker and Andrea Ichino).
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Citations: View citations in EconPapers (8)

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Related works:
Journal Article: The Impact of Property Condition Disclosure Laws on Housing Prices: Evidence from an Event Study Using Propensity Scores (2012)
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