Keywords

Social Connectedness, non-local buyers, Anchoring, House price, Real Estate Agents

Subject Categories

Finance and Financial Management | Real Estate

Abstract

This dissertation analyzes the price premia paid by Out-of-Town (or non-local) home buyers. The first essay investigates the role of social connectedness in the price premia paid by non-local buyers in the residential housing market. Using over 74,000 residential transactions from Orange and Seminole counties, Florida between 2016 and 2019 and exploiting the Social Connectedness Index (SCI) constructed based on Facebook friendship links, I show that non-local buyers who come from regions which are more socially connected to the purchase location pay about 1.8% to 2.1% lower premia compared to those coming from less connected regions. This effect is attributed to better information dissemination. While social connectedness plays an important role, its effect is conditional. For non-local buyers coming from high- appreciation or high-price origin markets, stronger social ties are associated with about a 2.6% higher price. Robustness checks using geographic matching, propensity score matching, and a counterfactual analysis support the results. Overall, the findings show that social ties can reduce information frictions, but their mitigating role is limited when anchoring bias is strong.

The second essay looks at how real estate brokers and agents affect the asymmetric information problem faced by non-local buyers. Non-local buyers not only confront asymmetric information, but their search framework also differs from that of local buyers. Agents working with non-local buyers therefore have to provide a different mix of service to meet these additional constraints. Employing the same dataset between 2004-2019, I show that agents specializing in non-local buyers negotiate lower purchase prices and significantly improve liquidity. Nevertheless, these agents do not eliminate the price premiums associated with anchoring, suggesting that behavioral biases persist despite improved market information. The findings remain robust to alternative measures of anchoring, geographic matching, and propensity score matching.

Completion Date

2026

Semester

Summer

Committee Chair

Turnbull, Geoffrey

Degree

Doctor of Philosophy (Ph.D.)

College

Barry S. Miller College of Business

Department

Department of Finance

Format

PDF

Document Type

Dissertation

Language

English

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