EconPapers    
Economics at your fingertips  
 

History dependence in the housing market

Philippe Bracke and Silvana Tenreyro ()

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Using the universe of housing transactions in England and Wales in the last twenty years, we document a robust pattern of history dependence in housing mar- kets. Sale prices and selling probabilities today are affected by aggregate house prices prevailing in the period in which properties were previously bought. We investigate the causes of history dependence, with its quantitative implications for the post-crisis recovery of the housing market. To do so we complement our analysis with administrative data on mortgages and online house listings, which we match to actual sales. We find that high leverage in the pre-crisis period and anchoring (or reference dependence) both contributed to the collapse and slow recovery of the volume of housing transactions. We find no asymmetric effects of anchoring to previous prices on current transactions; in other words, loss aversion does not appear to play a role over and above simple anchoring.

Keywords: housing market; fluctuations; down-payment effects; reference dependence; anchoring; loss aversion (search for similar items in EconPapers)
JEL-codes: N0 (search for similar items in EconPapers)
Date: 2020-09
New Economics Papers: this item is included in nep-eur, nep-his, nep-upt and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Published in American Economic Journal: Macroeconomics, September, 2020, 0(0), pp. 0-0. ISSN: 1945-7707

Downloads: (external link)
http://eprints.lse.ac.uk/103079/ Open access version. (application/pdf)

Related works:
Working Paper: History dependence in the housing market (2018) Downloads
Working Paper: History dependence in the housing market (2018) Downloads
Working Paper: History dependence in the housing market (2018) Downloads
Working Paper: History Dependence in the Housing Market (2017) Downloads
Working Paper: History Dependence in the Housing Market (2016) Downloads
Working Paper: History dependence in the housing market (2016) Downloads
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:ehl:lserod:103079

Access Statistics for this paper

More papers in LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library LSE Library Portugal Street London, WC2A 2HD, U.K.. Contact information at EDIRC.
Bibliographic data for series maintained by LSERO Manager ().

 
Page updated 2021-02-23
Handle: RePEc:ehl:lserod:103079