Nationality Bias at Home and Abroad: Theory and Evidence from Commercial Real Estate

Badarinza, Cristian; Ramadorai, Tarun; Shimizu, Chihiro

doi:10.2139/ssrn.3141255

SSRN Journal

2018

DOI: 10.2139/ssrn.3141255

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Nationality Bias at Home and Abroad: Theory and Evidence from Commercial Real Estate

Cristian Badarinza

Tarun Ramadorai

Chihiro Shimizu

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Cited by 6 publications

(1 citation statement)

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“…Li, Shen, and Zhang (2020), Barcelona, Converse, and Wong (2020), and Gorback and Keys (2020) focus on the role of Chinese house buyers on U.S. residential property markets, exploiting geographic variation. Badarinza, Ramadorai, and Shimizu (2020) and Agarwal, Sing, and Wang (2019) emphasize the importance of the nationality of the parties in a commercial real estate transaction. We complement this literature by providing a model with which to confront the empirical evidence on OOT investors.…”

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confidence: 99%

Out‐of‐Town Home Buyers and City Welfare

Favilukis¹,

Nieuwerburgh²

2021

The Journal of Finance

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The major cities of the world have attracted a flurry of interest from out-of-town (OOT) home buyers. Such capital inflows in local real estate have implications for affordability through their effects on prices and rents, but also for construction, local labor markets, the spatial distribution of residents, and ultimately economic welfare. We develop a spatial equilibrium model of a city that features heterogeneous households that make optimal decisions on consumption, savings, labor supply, tenure status, and location. The model generates realistic wealth accumulation and home ownership patterns over the life-cycle and in the cross-section. An inflow of OOT real estate buyers pushes up prices, rents, and wages. It increases the concentration of young, high-productivity, and wealthy households in the city center (gentrification). When OOT investors buy 10% of the housing stock, city welfare goes down by 0.3% of permanent consumption levels. The average renter suffers a large welfare loss while the average owner gains modestly. We adapt the model to the New York metro area, obtain detailed data on OOT purchases, and find that the observed increase in OOT purchases is associated with a 0.1% welfare loss.

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confidence: 99%

Out‐of‐Town Home Buyers and City Welfare

Favilukis¹,

Nieuwerburgh²

2021

The Journal of Finance

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Out-of-Town Home Buyers and City Welfare

Favilukis

Nieuwerburgh

2017

SSRN Journal

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What's Wrong with Pittsburgh?

Ghent

2017

SSRN Journal

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Nationality Bias at Home and Abroad: Theory and Evidence from Commercial Real Estate

Cited by 6 publications

References 45 publications

Out‐of‐Town Home Buyers and City Welfare

Out‐of‐Town Home Buyers and City Welfare

Out-of-Town Home Buyers and City Welfare

What's Wrong with Pittsburgh?

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