Understanding Price Spreads in the Housing Market - ODISSEI – Open Data Infrastructure for Social Science and Economic Innovations

Microdata Access Grant 2022. Authors: Jonas Wogh, Nils Kok, Jaap Bos (Maastricht University, School of Business and Economics).

Houses oftentimes sell at a price that differs significantly from the price that it was initially marketed for. This creates frustrating uncertainty for buyers and is at odds with the assumption of an efficient housing market, in which list prices reflect a house’s market value and should therefore be close to the final sale price. We study the spreads between list and sale prices along two dimensions: first, we examine whether the presence of certain house characteristics facilitates overbidding. This helps policymakers better understand price dynamics in the heated Dutch housing market. Second, we study whether ethnic minority buyers pay a price premium in order to obtain access to (certain) properties and neighborhoods. This constitutes the first quantitative analysis of house price discrimination and ethnic segregation in a European context.

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