Abstract
This study examines house transaction price differentials observed among funding type combinations; accounting for potential sample selection and spatial biases yields a better approximation of price differentials between group combinations. Consistent with expectations we detect, and correct for, selectivity and spatial biases. Transactions with conventional financing have superior characteristics compared to all-cash funded transactions, and Federal Housing Administration (FHA) and Veterans Affairs (VA) funded houses have inferior characteristics relative to all-cash characteristics. Price counterfactuals for (1) all-cash financed property, (2) conventional, (3) FHA, and (4) VA property transactions reveal, consistent with expectations, unexplained coefficient pricing premiums, i.e., a financing premium. However, total all-cash explained housing/neighborhood characteristics, are superior relative to FHA and VA financed properties. Results reinforce the notion that credit matters in the provision of financial services with regard to housing prices, while Blinder-Oaxaca price differential decompositions provide additional insights.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
