Information Spillovers and House Prices
39 Pages Posted: 20 Mar 2011
Date Written: March 15, 2011
We present direct evidence of information spillovers through transactions prices in real estate markets. This behavior is not explained by common shocks to housing values. The effect is strongest in homogenous markets, where the information content of price is higher. The effect is weakest among sellers expecting a nominal loss from selling, suggesting that behavioral factors may limit price-mediated information flow. Information spillovers improve liquidity, reducing time on market as much as 20%.
Keywords: House prices, information spillovers, housing market liquidity
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