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Home advantage: The preference for local residential real estate investment

journal contribution
posted on 2023-05-20, 10:34 authored by Wright, D, Maria YanottiMaria Yanotti
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 the proximity 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 locally and 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 geographic diversification in real estate markets. Our results indicate that the home bias may be partly mitigated by investor sophistication and is not driven by the relative purchasing power across geographic areas.

History

Publication title

Pacific Basin Finance Journal

Volume

57

Pagination

1-21

ISSN

0927-538X

Department/School

TSBE

Publisher

Elsevier BV

Place of publication

Netherlands

Rights statement

© 2019 Elsevier B.V. All rights reserved.

Repository Status

  • Restricted

Socio-economic Objectives

Preference, behaviour and welfare

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