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A recently published research study by two researchers from the University of Georgia shows that home buyers are willing to pay premium for the added esteem of living in communities with property names that include the words ‘‘country’’ and ‘‘country club.’’
The buyers pay an average of approximately 4.2 percent more for the word ‘‘country’’ in the property name and an additional 5.1 percent on top of that premium if the word ‘‘club’’ is added to form ‘‘country club’’ in the property name, all else equal.
In addition, the results also support the idea that wealthier buyers tend to practice conspicuous consumption. In other words, buyers who bought homes in top 25 percent of home prices are more willing to pay a price premium for the words ‘‘country club’’ than those in the bottom 25 percent. The authors also found that conspicuous consumption falls during recessionary periods, with home buyers less willing to pay premiums for the prestige associated with these words.
The study was based on data drawn from the MLS sales reports for Baton Rouge, Louisiana, a medium-size urban area with a population of about half a million (during the sample period) that has been the subject of much academic housing market research. The authors use a sample comprising broker-assisted housing transactions completed between October, 1984 and April, 2005.
Source: Velma Zahirovic-Herbert and Swarn Chatterjee (2011) What is the Value of a Name? Conspicuous Consumption and House Prices. Journal of Real Estate Research, Vol.33, No.1
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