Housing Tenure and Informational Asymmetries
(2018) In Journal of Real Estate Research 40(2). p.155-177- 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 a setting with strong financial incentives for tenants involved in such a conversion to take advantage of 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... (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 a setting with strong financial incentives for tenants involved in such a conversion to take advantage of 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 evidence supporting that insiders take advantage of an informational asymmetry; as newly formed cooperatives set monthly fees artificially low in order 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)
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https://lup.lub.lu.se/record/7edaf459-7d1c-43b7-95a8-e016af9cfc89
- author
- Kopsch, Fredrik LU and Donner, Herman
- organization
- publishing date
- 2018
- type
- Contribution to journal
- publication status
- published
- subject
- in
- Journal of Real Estate Research
- volume
- 40
- issue
- 2
- pages
- 155 - 177
- publisher
- American Real Estate Society
- external identifiers
-
- scopus:85054573003
- ISSN
- 0896-5803
- language
- English
- LU publication?
- yes
- id
- 7edaf459-7d1c-43b7-95a8-e016af9cfc89
- date added to LUP
- 2018-01-09 16:08:14
- date last changed
- 2022-04-17 18:09:29
@article{7edaf459-7d1c-43b7-95a8-e016af9cfc89,
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 a setting with strong financial incentives for tenants involved in such a conversion to take advantage of 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 evidence supporting that insiders take advantage of an informational asymmetry; as newly formed cooperatives set monthly fees artificially low in order 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.}},
author = {{Kopsch, Fredrik and Donner, Herman}},
issn = {{0896-5803}},
language = {{eng}},
number = {{2}},
pages = {{155--177}},
publisher = {{American Real Estate Society}},
series = {{Journal of Real Estate Research}},
title = {{Housing Tenure and Informational Asymmetries}},
volume = {{40}},
year = {{2018}},
}