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Home advantage: The preference for local residential real estate investment

Wright, D and Yanotti, MB ORCID: 0000-0001-9797-9582 2019 , 'Home advantage: The preference for local residential real estate investment' , Pacific Basin Finance Journal, vol. 57 , pp. 1-21 , doi: 10.1016/j.pacfin.2019.06.014.

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Abstract

Do residential real estate investors hold locally-concentrated or geographically-diversified portfolios? We identify a large sample of investors in the residential property market and measure theproximity of their investment properties to their owner-occupied address to study this question.We hypothesize that there is a preference among residential real estate investors to buy locallyand find strong empirical support for this. This preference is in line with the results of ‘home bias’research in other investment markets, yet contrasts with the documented benefits of geographicdiversification in real estate markets. Our results indicate that the home bias may be partlymitigated by investor sophistication and is not driven by the relative purchasing power acrossgeographic areas.

Item Type: Article
Authors/Creators:Wright, D and Yanotti, MB
Keywords: housing investors, home bias, anchoring, information asymmetry
Journal or Publication Title: Pacific Basin Finance Journal
Publisher: Elsevier BV
ISSN: 0927-538X
DOI / ID Number: 10.1016/j.pacfin.2019.06.014
Copyright Information:

© 2019 Elsevier B.V. All rights reserved.

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