Title: When Rumors Meet Reality: The Impact of “Dust Floor” Myths and Pollution Events on Housing Prices

Speaker: Xiao Wang, Hunan University

Time: 2025/05/08 13:30-15:00

Venue: 106 Zhonghui Building

Abstract

Housing prices respond to environmental risks in local neighborhoods when information about the risks is well disclosed to the market. Most often, the information disclosure is through official channels such as government regulatory announcements and pollution monitoring data. However, when official information is delayed or incomplete, informal signals such as rumors can play a substantial role in shaping public perceptions of environmental risks. This paper studies the response of housing prices to a “dust floor” rumor, concerning housing units located on the 9th to 11th floors of a building to experience higher exposure to air pollution. We employ a triple-difference strategy to analyze how interactions between the rumor and visible environmental events - sandstorms - affect the prices of condo units on floors 9 to 11, relative to those on adjacent floors. The analysis draws upon micro-level housing transaction data of newly-built and resale condominums in Beijing, China from 2015 to 2023. Our results reveal that the rumor on environmental risks alone does not significantly distort housing prices, but when coupled with sandstorm events, it leads to a 3.5% price reductions for the rumor-affected housing units. We also observe a stronger price effect of the rumor on lower-priced houses. Preliminary analysis on the rental housing market shows no effect on rental price.