1. Misinformed Speculators and Mispricing in the Housing Market.
- Author
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Chinco, Alex and Mayer, Christopher
- Subjects
HOME prices ,SPECULATORS ,HOUSING market ,SECOND homes ,VENDORS (Real property) ,APPRECIATION (Accounting) ,PRICING ,CAPITAL gains ,TWENTY-first century ,ATTITUDE (Psychology) ,PRICES ,ECONOMICS ,ECONOMIC history - Abstract
This paper examines the contribution of out-of-town second-house buyers to mispricing in the housing market. We show that demand from out-of-town second-house buyers during the mid 2000s predicted not only house-price appreciation rates but also impliedto- actual-rent-ratio appreciation rates, a proxy for mispricing. We then apply a novel identification strategy to address the issue of reverse causality. We give supporting evidence that out-of-town second-house buyers behaved like misinformed speculators, earning lower capital gains (misinformed) and consuming smaller dividends (speculators). [ABSTRACT FROM AUTHOR]
- Published
- 2016
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