Journal Article
Superstar Returns: Spatial Heterogeneity in Returns to Housing
Journal of Finance, 80(5): 3057-3094
Authors
Publication Date
forthcoming
DOI
JEL Classification
E21
G11
G52
N90
R21
R31
Key Words
Related Topics
International Finance
Real Estate Market
This paper makes the first comprehensive attempt to study within-country heterogeneity of housing returns. We introduce a new city-level data set covering 15 OECD countries over 150 years and show that national housing markets are characterized by systematic spatial variation in housing returns. Total returns in large agglomerations are close to 100 basis points lower per year than in other parts of the same country. The excess returns outside the large cities can be rationalized as a compensation for higher risk, especially higher co-variance with income growth and lower liquidity. Real estate in diversified large agglomerations is comparatively safe.
