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 data on the universe of housing transactions in England and Wales over a 20-year period, we document that sale prices and selling propensities are affected by house prices prevailing in the period in which properties were previously bought. Using administrative data on mortgages, we show that cognitive frictions explain most of the history dependence in sale prices, whereas credit frictions are more relevant for selling propensities. We corroborate our analysis with data on online house listings, and we estimate the impact of history dependence on the collapse and slow recovery of housing market activity in the postcrisis period. (JEL E32, R21, R31)

Keywords: housing market; fluctuations; down-payment effects; reference dependence; anchoring; loss aversion (search for similar items in EconPapers)
JEL-codes: E32 R21 R31 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2021-04-01
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: View citations in EconPapers (6)

Published in American Economic Journal: Macroeconomics, 1, April, 2021, 13(2), pp. 420 - 443. ISSN: 1945-7707

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

Related works:
Journal Article: History Dependence in the Housing Market (2021)
Working Paper: History dependence in the housing market (2018)
Working Paper: History dependence in the housing market (2018)
Working Paper: History dependence in the housing market (2018)
Working Paper: History Dependence in the Housing Market (2017)
Working Paper: History Dependence in the Housing Market (2016)
Working Paper: History dependence in the housing market (2016)
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