New Paint, Furnishings Don’t Command Higher Price for Home Sellers, ODU Study Reveals
A new study by researchers at Old Dominion University's Institute for Behavior and Experimental Real Estate (IBERE) indicates that, contrary to perception, painting or furnishing a home when listing it for sale does not appear to result in a higher price for the home seller.
Michael Seiler, ODU's Robert M. Stanton Endowed Chair of Real Estate and Economic Development, and Mark Lane, associate professor of finance, presented their findings at the second annual Hampton Roads Residential Market Review and Real Estate Research Symposium on Wednesday, Nov. 14.
Hosted by ODU's E.V. Williams Center for Real Estate and Economic Development (CREED), the symposium brought together experts in economics and real estate to discuss society and industry trends affecting the local market.
Seiler and Lane's online study of 820 participants showed six different variations of the same home - well furnished, poorly furnished and unfurnished, combined with neutral and more outlandish wall colors.
In their presentation to a crowd of several hundred at the CREED symposium, Seiler and Lane said that while homeowners form vastly different impressions of homes based on the type of paint or furnishings, these cosmetic changes do not affect the home price.
That contradicts a long-standing truism of the real estate market, that furnishings and wall color affect the price a homeowner would receive if they sell. "We find no direct evidence of a price effect," Seiler said.
However, the overall impression of the home was lowered in the study sample if the home was vacant, or had ugly paint, whereas a well-furnished home makes the home feel more livable to prospective buyer.
Seiler, IBERE director, is known across the country for his research into the behaviors of homeowners in a challenging real estate market. It builds on the research pioneered at IBERE, which analyzes how psychological factors affect real estate decisions on an individual level, and market-wide.
CREED launched the Residential Market Review in 2011 to accompany its annual Hampton Roads Real Estate Market Review, held every March for the past 17 years.
The theme of this year's Residential Market Review and Real Estate Research Symposium was "Exploring Opportunities and Challenges for the Region's Housing Market." As the local housing market recovers, slowly, experts from industry and academia will provide insight about economic trends, new home sales and construction, and multifamily property development and investment.
Other presenters at the Review included:
- Michael Fratantoni, vice president of single-family research and policy development for the Mortgage Bankers Association, who presented a national housing and mortgage market outlook;
- Dwight Dunton, president and founder of Bonaventure Realty Group, LLC, who spoke about multifamily property development and investment;
- J. Van Rose, president of Rose & Womble Realty, who presented on new home sales and construction in the Hampton Roads market; and
- Professors Vinod Agarwal and Gary Wagner of the Old Dominion University Economic Forecasting Project. Agarwal spoke on the Housing Price Index for Hampton Roads. Wagner talked about trends in the residential housing market for existing homes.