What Have They Been Thinking" Home Buyer Behavior in Hot and Cold Markets -- A 2014 Update

Karl Case, Robert J. Shiller () and Anne K. Thompson
Additional contact information
Robert J. Shiller: Cowles Foundation, Yale University, https://economics.yale.edu/people/faculty/robert-shiller
Anne K. Thompson: Dodge Data and Analytics

No 1876R, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: Questionnaire surveys undertaken in 1988 and annually from 2003 through 2014 of recent homebuyers in each of four U.S. metropolitan areas shed light on their expectations and reasons for buying during the recent housing boom and subsequent collapse. They also provide insight into the reasons for the housing crisis that initiated the current financial malaise. We find that homebuyers were generally well informed, and that their short-run expectations if anything underreacted to the year-to-year change in actual home prices. More of the root causes of the housing bubble can be seen in their long-term (10-year) home price expectations, which reached abnormally high levels relative to mortgage rates at the peak of the boom and have declined sharply since. The downward turning point, around 2005, of the long boom that preceded the crisis was associated with changing public understanding of speculative bubbles.

JEL-codes: R30 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2012-09, Revised 2015-03
New Economics Papers: this item is included in nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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