Home Is Where the Ad Is: Online Interest Proxies Housing Demand

24 Pages Posted: 14 Oct 2018 Last revised: 21 Oct 2018

See all articles by Marco Pangallo

Marco Pangallo

Scuola Superiore Sant'Anna di Pisa

Michele Loberto

Bank of Italy

Date Written: October 18, 2018

Abstract

Online activity leaves digital traces of human behavior. In this paper we investigate if online interest can be used as a proxy of housing demand, a key yet so far mostly unobserved feature of housing markets. We analyze data from an Italian website of housing sales advertisements (ads). For each ad, we know the timings at which website users clicked on the ad or used the corresponding contact form. We show that low online interest — a small number of clicks/contacts on the ad relative to other ads in the same neighborhood — predicts longer time on market and higher chance of downward price revisions, and that aggregate online interest is a leading indicator of housing market liquidity and prices. As online interest affects time on market, liquidity and prices in the same way as actual demand, we deduce that it is a good proxy. We then turn to a standard econometric problem: what difference in demand is caused by a difference in price? We use machine learning to identify pairs of duplicate ads, i.e. ads that refer to the same housing unit. Under some caveats, differences in demand between the two ads can only be caused by differences in price. We find that a 1% higher price causes a 0.66% lower number of clicks.

Keywords: Online Data, Housing Market, Econometrics, Machine Learning, Causality

JEL Classification: C44, C81, R31

Suggested Citation

Pangallo, Marco and Loberto, Michele, Home Is Where the Ad Is: Online Interest Proxies Housing Demand (October 18, 2018). Available at SSRN: https://ssrn.com/abstract=3253217 or http://dx.doi.org/10.2139/ssrn.3253217

Marco Pangallo (Contact Author)

Scuola Superiore Sant'Anna di Pisa ( email )

Biblioteca Scuola Superiore Sant'Anna
Piazza Martiri della Liberta, n. 33
Pisa, 56127
Italy

Michele Loberto

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

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