ABSTRACT
This study uses a bargaining power model to examine the relative bargaining power of those who self-identify as being either residential home traders or investors, both in the Corsican housing market. In doing so, ours is the first study to measure investment advantages (disadvantages) related to property location and size. Results indicate that investors pay, on average, 6.5–10.5% more and sell, on average, for 6.5–10.5% less than those in the market for primary residences. Findings also show a significant and negative demand effect for investors. Investors are shown to gain more bargaining power as the property size increases and the distance from the sea is longer.
Disclosure statement
No potential conflict of interest was reported by the authors.
Notes
1 The study of the effects of tourism activities on housing prices is relatively recent (Biagi, Brandano, and Lambiri Citation2015). The main drawback of this research area is due to the use of the inverted demand model approach and aggregate data. In this framework, tourism activities are mainly treated as a type of externality that could affect market equilibrium without differentiating between residents and second-home owners.
2 More detailed information about the variables is given in Caudill, Detotto, and Prunetti (Citation2020).
3 By means of a monthly panel data approach, Jin and Rafferty (Citation2018) find that mortgage rates are positively associated with housing price growth. The same findings are provided by Jauregui, Tidwell, and Hite (Citation2017). They measure buyers’ expected discount for cash purchases using a large dataset of 9,716 housing transactions in Franklin County, Ohio.
4 A slight extension of the HRS model that allows for asymmetric bargaining power is provided by Colwell and Munneke (Citation2006).
5 A more detailed explanation of the construction of similar sum and difference variables is provided by Caudill, Detotto, and Prunetti (Citation2020).
6 Data source at the following link: https://www.perval.fr. This dataset is used in the recent work by Caudill, Detotto, and Prunetti (Citation2020).