Home-value insurance and idiosyncratic risks of residential property prices

  • Alfred Larm Teye TU Delft, Architecture and the Built Environment

Abstract

The recent Global Financial Crisis has reawakened home-owners to the need for protecting their home-equities from possible future house price decline. This paper re-examines the Shiller and Weiss (1999) home-value insurance scheme and proposes a modification that eliminates a large proportion of the idiosyncratic sale price risks of residential properties. Using data between 1995 and 2014 for Amsterdam, the proposed insurance policy shows a higher pay-out efficiency, a higher loss coverage and a greater pay-out probability than the original Shiller and Weiss (1999) scheme. The new home-value insurance policy thus provides better protection for the property sale price risks.

How to Cite
TEYE, Alfred Larm. Home-value insurance and idiosyncratic risks of residential property prices. A+BE | Architecture and the Built Environment, [S.l.], n. 3, p. 68-79, dec. 2018. ISSN 2214-7233. Available at: <https://journals.open.tudelft.nl/index.php/abe/article/view/3574>. Date accessed: 16 june 2019. doi: https://doi.org/10.7480/abe.2018.3.3574.
Published
2018-12-20