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Momentum traders in the housing market: survey evidence and a search model

Author

Listed:
  • Monika Piazzesi
  • Martin Schneider

Abstract

This paper studies household beliefs during the recent US housing boom. To characterize the heterogeneity in households? views about housing and the economy, we perform a cluster analysis on survey responses at different stages of the boom. The estimation always finds a small cluster of households who believe it is a good time to buy a house because house prices will rise further. The size of this ?momentum? cluster doubled towards the end of the boom. We also provide a simple search model of the housing market to show how a small number of optimistic investors can have a large effect on prices without buying a large share of the housing stock. ; This paper is an extension of Monika Piazzesi's and Martin Schneider's work while they were in the Research Department of the Federal Reserve Bank of Minneapolis.

Suggested Citation

  • Monika Piazzesi & Martin Schneider, . "Momentum traders in the housing market: survey evidence and a search model," Staff Report, Federal Reserve Bank of Minneapolis.
    • Handle: RePEc:fip:fedmsr:422
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    File URL: http://www.minneapolisfed.org/publications_papers/pub_display.cfm?id=4164
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    File URL: http://www.minneapolisfed.org/research/SR/SR422.pdf
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    More about this item

    Keywords

    Housing; Inflation (Finance); Interest rates;
    All these keywords.

    JEL classification:

    • E0 - Macroeconomics and Monetary Economics - - General
    • G1 - Financial Economics - - General Financial Markets
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • R2 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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