Attention and Search: Micro-Evidence on Housing Market Momentum

67 Pages Posted: 7 Feb 2020 Last revised: 27 Apr 2020

See all articles by Antonio Gargano

Antonio Gargano

University of Melbourne - Department of Finance

Marco Giacoletti

Marshall School of Business

Elvis Jarnecic

The University of Sydney; Financial Research Network (FIRN)

Date Written: January 13, 2020

Abstract

We study fluctuations in prospective buyers' attention to the housing market and their effects on home sales. Prospective buyers respond to price growth in their postcode of residence by increasing search intensity and searching across a broader range of locations and property characteristics. Heterogeneity in responses points at the relaxation of collateral constraints, rather than extrapolative beliefs or behavioral biases, as the main channel through which prices affect behavior. The expansion of search ranges leads to higher sale prices for houses listed in other postcodes. Our results provide micro-evidence of a channel through which local price growth generates spillovers and price momentum within a metropolitan area.

Keywords: Attention, House Search, House Prices, Momentum

JEL Classification: D10, E32, G40, R31

Suggested Citation

Gargano, Antonio and Giacoletti, Marco and Jarnecic, Elvis, Attention and Search: Micro-Evidence on Housing Market Momentum (January 13, 2020). Available at SSRN: https://ssrn.com/abstract=3519635 or http://dx.doi.org/10.2139/ssrn.3519635

Antonio Gargano

University of Melbourne - Department of Finance ( email )

Faculty of Economics and Commerce
Parkville, Victoria 3010 3010
Australia

Marco Giacoletti (Contact Author)

Marshall School of Business ( email )

701 Exposition Blvd
Los Angeles, CA 90089
United States

Elvis Jarnecic

The University of Sydney ( email )

University of Sydney
Sydney, NC NSW 2006
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

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