Superstar Returns

Francisco Amaral (1) , Martin Dohmen (1) , Sebastian Kohl (2) , Moritz Schularick (1, 3, 4)

1 Universität Bonn = University of Bonn
2 Max Planck Institute for the Study of Societies
3 ECON - Département d'économie (Sciences Po)
4 Federal Reserve Bank of New York

We study long-term returns on residential real estate in twenty-seven "superstar" cities in fifteen countries over 150 years. We find that total returns in superstar cities are close to 100 basis points lower per year than in the rest of the country. House prices tend to grow faster in the superstars, but rent returns are substantially greater outside the big agglomerations, resulting in higher long-run total returns. The excess returns outside the superstars can be rationalized as a compensation for risk, especially for higher covariance with income growth and lower liquidity. Superstar real estate is comparatively safe.

Mots clés: Housing returns; Housing risk; Superstar cities; Regional housing markets

Domaines: Economies et finances

Francisco Amaral, Martin Dohmen, Sebastian Kohl, Moritz Schularick. Superstar Returns. 2021. ⟨hal-03881493⟩