Sentiment and its asymmetric effect on housing returns

Sergiy Saydometov, Sanjiv Sabherwal and Ramya Rajajagadeesan Aroul

Review of Financial Economics, 2020, vol. 38, issue 4, 580-600

Abstract: We use Google search frequency to construct sentiment indices (positive and negative) for the housing market. We find that future housing prices are negatively related to our measure of negative sentiment but not significantly related to that of positive sentiment. These relationships are robust to controls for macroeconomic variables, stock market return, and Housing Market Index, a survey‐based housing sentiment index. Furthermore, we find that an increase in negative sentiment results in a significant negative response in housing prices, while a decrease evokes little response. Thus, the housing market exhibits asymmetric responses to negative and positive sentiment and to increases versus decreases in negative sentiment. We attribute these asymmetric responses to the “negativity effect.” Finally, we find that home prices are more sensitive to sentiment during recessionary periods.

Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1002/rfe.1097

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wly:revfec:v:38:y:2020:i:4:p:580-600

Access Statistics for this article

More articles in Review of Financial Economics from John Wiley & Sons
Bibliographic data for series maintained by Wiley Content Delivery ().