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Housing purchases and the dynamics of housing wealth

Olympia Bover ()

No 1036, Working Papers from Banco de España, Working Papers Homepage

Abstract: I model the purchase behavior of main and secondary housing by Spanish households using the panel sample from the first two waves of the Spanish household finance survey (EFF). I estimate discrete hazard models using retrospective and within-period purchase sequences. I also estimate an (S,s) model combining transactions data with longitudinal information on household wealth and housing stock values. I look at the role of adaptive expectations about the rate of return on housing and find they have a positive and signifi cant effect on the demand for houses. This is true for historical and within-period purchase probabilities as well as for the target ratio of housing wealth to total wealth. The volatility of house price growth has a negative effect on purchases for investment but a positive one on purchases for consumption.

Keywords: Household finance; house purchases; secondary homes; housing returns; adaptive expectations; (S; s) rule (search for similar items in EconPapers)
JEL-codes: D14 G11 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ure
Date: 2010-12
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