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Neighborhood externality risk and the homeownership status of properties

By Christian A.L. Hilber

Abstract

In contrast to corporate and institutional investors, single owner-occupiers cannot adequately diversify housing investment risk. Consequently, homeownership should be relatively less likely in places with higher housing investment risk. Using the American Housing Survey, it is documented that neighborhood externality risk, a major component of housing investment risk, substantially reduces the probability that a housing unit is owner-occupied, even when controlling for housing type and numerous location and household specific characteristics. The effects are quantitatively meaningful and change-in-change estimates suggest that the effects are causal

Topics: HT Communities. Classes. Races, G Geography (General)
Publisher: London School of Economics and Political Science
Year: 2004
OAI identifier: oai:eprints.lse.ac.uk:4441
Provided by: LSE Research Online
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