Do home sellers know their market? Evidence from neighbourhood sober-living houses

ABSTRACT

We use a listing price hedonic model coupled with a standard selling price model to identify seller beliefs about how the housing market responds to refurbished formerly substandard properties serving as group homes. Occupied houses benefit the most and vacant houses the least in the long run from a nearby group home. The listing price model indicates that sellers of owner-occupied and rental houses anticipate these price effects whereas sellers of vacant properties appear to systematically underestimate the discount associated with vacant houses per se but correctly anticipate the smaller long run group home premia for their properties.

KEYWORDS:

• House seller expectations
• group homes
• sober-living houses
• neighbourhood externalities

JEL CLASSIFICATION:

• R1
• R2
• R3

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ The Harding, Rosenthal, and Sirmans (2003) reduced form approach does not distinguish differences in buyer and seller beliefs from bargaining power.

² Information drawn from https://oxfordhouse.org/userfiles/file/doc/eval_va2007.pdf downloaded 1 September 2019.