Local Economic Conditions and Repeat-Sale Indices Performance: Evidence from a Moderation Effect Specification

Antoine Giannetti

Journal of Real Estate Research, 2021, vol. 43, issue 3, 271-289

Abstract: The paper relates the documented smoothness of housing repeat-sale indices growth to time-varying changes in local economic conditions. Empirically, a metro economic condition index serves as a moderator variable in a dynamic partial equilibrium model that connects price appreciation to innovations in trading volume. The estimated moderation effect substantially dampens the long-run response to shocks in volume. Overall, the empirical findings are consistent with theoretical models that hypothesize that sellers’ reservation prices change counter-cyclically, thus smoothing repeat-sale index price appreciation.

Date: 2021
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DOI: 10.1080/08965803.2021.1942751

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