Researchers find value in prestigious-sounding neighborhoods

A study of the Baton Rouge real estate market found that people are willing to pay a premium for homes in neighborhoods with prestigious names. Researchers at the University of Georgia went back through Baton Rouge home sale records from 1984 to 2005 to conduct the study. They found that buyers assigned a 4.2% premium for neighborhoods with “country” in the title and another 5.1% if the word “club” is in the name. Velma Zahirovic-Herbert and Swarn Chatterjee, the authors of the research, say, “Buyers of more expensive houses may be willing to pay more for a name that conveys prestige than they are willing to pay for a good school for their children.” They found that wealthier buyers were more likely to pay the price premium, but willingness goes down during recessions. The study ran in the Journal of Real Estate Research. To see the research paper, click here