Working Paper

Superstar Returns: Spatial Heterogeneity in Returns to Housing

Authors

  • Amaral
  • Francisco.
  • Dohmen
  • Martin.
  • Kohl
  • Sebastian.
  • Schularick
  • Moritz
Publication Date

This paper makes the first comprehensive attempt to study within-country heterogeneity

of housing returns. We introduce a new city-level data set covering 15 OECD countries

over 150 years and show that national housing markets are characterized by systematic

spatial variation in housing returns. Total returns in large agglomerations are close to 100

basis points lower per year than in other parts of the same country. The excess returns

outside the large cities can be rationalized as a compensation for higher risk, especially

higher co-variance with income growth and lower liquidity. Real estate in diversified large

agglomerations is comparatively safe.

Info

JEL Classification
E21, G11, G52, N90, R21, R31

Key Words

  • housing markets
  • household portfolios
  • asset returns