Abstract:
We show that high-income buyers earn higher capital gains on housing using detailed transaction data from Denmark. Geographic location statistically accounts for nearly all the difference, with little role for aggregate market timing, property type, or other buyer characteristics. This finding is consistent with income-based sorting, whereby higher-income households systematically sort into locations with persistently higher price growth. We test whether credit conditions shape access to locations with higher house-price growth and find no detectable change in buyer composition by income rank around major credit expansions and contractions.