Housing Tenure and Informational Asymmetries
(2018) In Journal of Real Estate Research 40(2). p.155-178- Abstract
The paradigm shift of focus from rental apartments to owner-occupied units on the Swedish property market has led to a substantial number of rental apartments being converted to cooperative apartments. Such conversions are typically done at prices below market value. This provides strong financial incentives for tenants involved in such a conversion to use their informational advantage regarding the financial management of a cooperative, compared to less informed neighbors and buyers on the general market. This setting also provides a reliable way of estimating the persistence and effects of such an informational asymmetry through nearly 200,000 apartment transactions in Stockholm, Sweden, during the period of 2005 through mid-2014. We... (More)
The paradigm shift of focus from rental apartments to owner-occupied units on the Swedish property market has led to a substantial number of rental apartments being converted to cooperative apartments. Such conversions are typically done at prices below market value. This provides strong financial incentives for tenants involved in such a conversion to use their informational advantage regarding the financial management of a cooperative, compared to less informed neighbors and buyers on the general market. This setting also provides a reliable way of estimating the persistence and effects of such an informational asymmetry through nearly 200,000 apartment transactions in Stockholm, Sweden, during the period of 2005 through mid-2014. We find that insiders take advantage of an informational asymmetry as newly formed cooperatives set monthly fees artificially low to increase the probability of a conversion as well as apartment values. However, market participants seem to discount this informational asymmetry as recently converted apartments sell at lower prices.
(Less)
- author
- Donner, Herman and Kopsch, Fredrik LU
- organization
- publishing date
- 2018
- type
- Contribution to journal
- publication status
- published
- subject
- keywords
- housing tenure, informational asymmetries, real estate
- in
- Journal of Real Estate Research
- volume
- 40
- issue
- 2
- pages
- 24 pages
- publisher
- American Real Estate Society
- external identifiers
-
- scopus:85119998283
- ISSN
- 0896-5803
- DOI
- 10.1080/10835547.2018.12091496
- language
- English
- LU publication?
- yes
- id
- 69ae2401-f0d5-4fbb-b8cf-2d8a71cb4700
- date added to LUP
- 2021-12-15 09:38:00
- date last changed
- 2022-03-27 00:02:13
@article{69ae2401-f0d5-4fbb-b8cf-2d8a71cb4700,
abstract = {{<p>The paradigm shift of focus from rental apartments to owner-occupied units on the Swedish property market has led to a substantial number of rental apartments being converted to cooperative apartments. Such conversions are typically done at prices below market value. This provides strong financial incentives for tenants involved in such a conversion to use their informational advantage regarding the financial management of a cooperative, compared to less informed neighbors and buyers on the general market. This setting also provides a reliable way of estimating the persistence and effects of such an informational asymmetry through nearly 200,000 apartment transactions in Stockholm, Sweden, during the period of 2005 through mid-2014. We find that insiders take advantage of an informational asymmetry as newly formed cooperatives set monthly fees artificially low to increase the probability of a conversion as well as apartment values. However, market participants seem to discount this informational asymmetry as recently converted apartments sell at lower prices.</p>}},
author = {{Donner, Herman and Kopsch, Fredrik}},
issn = {{0896-5803}},
keywords = {{housing tenure; informational asymmetries; real estate}},
language = {{eng}},
number = {{2}},
pages = {{155--178}},
publisher = {{American Real Estate Society}},
series = {{Journal of Real Estate Research}},
title = {{Housing Tenure and Informational Asymmetries}},
url = {{http://dx.doi.org/10.1080/10835547.2018.12091496}},
doi = {{10.1080/10835547.2018.12091496}},
volume = {{40}},
year = {{2018}},
}