Second‐home buying and the housing boom and bust

Daniel I. García

Real Estate Economics, 2022, vol. 50, issue 1, 33-58

Abstract: I estimate the effects of second‐home buying (existing homeowners acquiring additional properties) on the housing boom and bust, by constructing a new measure and using a new identification strategy based on the rise in out‐of‐town demand for second homes in vacation areas during the housing boom. Areas with plausibly exogenous higher second‐home buying experienced a sharper boom and bust: faster growth in house prices and construction employment from 2000 to 2006, and a sharper contraction from 2006 to 2010. The results suggest that changes in credit demand were important in amplifying the recent housing cycle.

Date: 2022
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https://doi.org/10.1111/1540-6229.12343

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