The Impact of Property Condition Disclosure Laws on Housing Prices: Evidence from an Event Study using Propensity Scores

We examine the impact of seller's Property Condition Disclosure Law on the residential real estate values. A disclosure law may address the information asymmetry in housing transactions shifting of risk from buyers and brokers to the sellers and raising housing prices as a result. We combine propensity score techniques from the treatment effects literature with a traditional event study approach. We assemble a unique set of economic and institutional attributes for a quarterly panel of 291 US Metropolitan Statistical Areas (MSAs) and 50 US States spanning 21 years from 1984 to 2004 is used to exploit the MSA level variation in house prices. The study finds that the average seller may be able to fetch a higher price (about three to four percent) for the house if she furnishes a state-mandated seller.s property condition disclosure statement to the buyer. When we compare the results from parametric and semi-parametric event analyses, we find that the semi-parametric or the propensity score analysis generals moderately larger estimated effects of the law on housing prices.

Which School Attributes Matter? The Influence of School District Performance and Demographic Composition on Property Values

Increasing levels of segregation in American schools raises the question: do home buyers pay for test scores or demographic composition? This paper uses Connecticut panel data spanning eleven years from 1994 to 2004 to ascertain the relationship between property values and explanatory variables that include school district performance and demographic attributes, such as racial and ethnic composition of the student body. Town and census tract fixed effects are included to control for neighborhood unobservables. The effect of changes in school district attributes is also examined over a decade long time frame in order to focus on the effect of long run changes, which are more likely to be capitalized into prices. The study finds strong evidence that increases in percent Hispanic has a negative effect on housing prices in Connecticut, but mixed evidence concerning the impact of test scores on property values. Evidence is also found to suggest that student test scores have increased in importance for explaining housing prices in recent years while the importance of percent Hispanic has declined. Finally, the study finds that estimates of property tax capitalization increase substantially when the analysis focuses on long run changes.

Property Law

This chapter examines the economics of property rights and property law. Property law is a fundamental part of social organization and is also fundamental to the operation of the economy because it defines and protects the bundle of rights that constitute property. Property law thereby creates incentives to protect and invest in assets and establishes a legal framework within which market exchange of assets can take place. The purpose of this chapter is to show how the economics of property rights can be used to understand fundamental features of property law and related extra-legal institutions. The chapter will both examine the rationale for legal doctrine and the effects of legal doctrine regarding the exercise, enforcement, and transfer of rights. It will also examine various property rights regimes including open access, private ownership, common property and state property. The guiding questions are: How are property rights established? What explains the variation in the types of property rights? What governs the use and transfer of rights? And, how are property rights enforced?