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Momentum traders in the housing market: survey evidence and a search model
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.
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File(s): File format is application/pdf http://www.minneapolisfed.org/publications_papers/pub_display.cfm?id=4164
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Bibliographic Information
Provider: Federal Reserve Bank of Minneapolis
Part of Series: Staff Report
Publication Date: 2009
Number: 422