An essay on the distributional properties of real estate price and their economic consequences

Using a dataset of real estate transactions based in New Work City and spanning from 2003 to 2016, the characteristic of the Big Apple real estate market has been studied as stemming from the empirical evidence on the statistical distribution fit. Indeed, every statistical representation entails some technical properties, that can be interpreted in an economic fashion. In particular, fat-tailness and weak evidence on the presence of a Central Limit Theorem dynamics underlying the empirical distribution has been detected from the results delivered by the Goodness of Fit analysis on the yearly and borough level datasets. It entails the heterogeneity of the market and the presence of an economic mechanism correlating the magnitude of the observed prices. The results are robust to the exclusion of commercial properties transactions, characterised by higher prices than the residential ones. Then, a brief analysis of New York City residential market is conducted from the distributional standpoint of AEP, the best fitting distribution between the analysed ones: the main findings are consistent with spillover effect and boroughs heterogeneity. Finally, some theoretical interpretations are provided, in strict connection with income, expectations and pseudo wealth role during the crisis