Housing vintage and price dynamics

The vintage of a home often refers to a period-specific collection of architectural characteristics, materials, and quality. Due to age, cost of materials and construction, some vintages may not be easily reproduced — effectively rendering them supply constrained. More conventional sources of supply constraints like high levels of land use regulation influence the risk and reward profiles of homes. Are similar supply constraint-induced dynamics associated with particular vintages? In other words, does the vintage of a house influence its price dynamics? Using residential property transaction data from the Netherlands spanning 2000–2017, we construct relative price indexes for three vintages. A repeat sales model with granular location × year fixed effects and time varying maintenance controls allows for the identification of the effect of vintage on price dynamics. In general, older and more architecturally desirable vintages (pre-1900 and 1900–1945) display larger returns. From a practical point of view, the vintage driven variation in price dynamics we observe has implications for institutions concerned with modeling real estate returns and risk.

Published in Regional Science and Urban Economics

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