The cost of heating a house can be a large recurring cost for homeowners and rational buyers should capitalize this expense into the price they are willing to pay. I utilize hedonic price regressions to investigate if differences in heating costs are reflected in sales prices in the way theory would expect. I find that an increase in yearly heating expense is associated with a decrease in sales price ten times greater, this implies a capitalization rate of 30-50% under reasonable assumptions. These results are similar to or slightly lower than previous literature. Low capitalization of energy expense means that individuals are unlikely to invest in green home upgrades even when the net present value is positive.
| Identifer | oai:union.ndltd.org:UPSALLA1/oai:DiVA.org:uu-390322 |
| Date | January 2019 |
| Creators | Söderström, Martin |
| Publisher | Uppsala universitet, Nationalekonomiska institutionen |
| Source Sets | DiVA Archive at Upsalla University |
| Language | English |
| Detected Language | English |
| Type | Student thesis, info:eu-repo/semantics/bachelorThesis, text |
| Format | application/pdf |
| Rights | info:eu-repo/semantics/openAccess |
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