Keywords
out-of-state buyers, real estate price premium, search costs bias
Abstract
We explore the questions of whether and why out-of-state buyers pay more for real estate than their in-state counterparts. Theoretically, we develop a model capable of explaining a premium if out-of-state buyers have high search costs, upwardly biased beliefs about prices or an unusually short time horizon to purchase. Empirically, we find that out-of-state buyers pay a statistically significant and economically meaningful premium for apartment complexes in the Phoenix area. We also find some evidence consistent with the premium being driven by high search costs, biased beliefs (anchoring) and haste associated with out-of-state buyers.
Original Publication Citation
Lambson, V., G. McQueen, and B. Slade, 2004, Do Out-of-State Buyers Pay More for Real Estate? An Examination of Anchoring-Induced Bias and Search Costs, Real Estate Economics, 32:1, pp. 85 – 126.
BYU ScholarsArchive Citation
Lambson, Val E.; McQueen, Grant R.; and Slade, Barrett A., "Do Out-of-State Buyers Pay More for Real Estate? An Examination of Anchoring-Induced Bias and Search Costs" (2004). Faculty Publications. 8917.
https://scholarsarchive.byu.edu/facpub/8917
Document Type
Peer-Reviewed Article
Publication Date
2004
Publisher
Real Estate Economics
Language
English
College
Marriott School of Business
Department
Finance
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