What Have They Been Thinking" Home Buyer Behavior in Hot and Cold Markets

Karl Case, Robert Shiller and Anne K. Thompson
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Anne K. Thompson: McGraw-Hill Construction

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

Abstract: Questionnaire surveys we have undertaken in 1988 and annually 2003�2012 of recent homebuyers in each of four U.S. cities shed light on their expectations and reasons for buying and selling during the recent housing boom and subsequent collapse, and on 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 bubble can be seen in their long-term, ten-year, home price expectations, which reached abnormal levels relative to the mortgage rate at the peak of the boom and 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: 40 pages
Date: 2012-09
New Economics Papers: this item is included in nep-ure
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Citations: View citations in EconPapers (115)

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Related works:
Journal Article: What Have They Been Thinking? Homebuyer Behavior in Hot and Cold Markets (2012)
Working Paper: What Have They Been Thinking? Home Buyer Behavior in Hot and Cold Markets (2012)
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