Attention and Search: Micro-Evidence on Housing Market Momentum
67 Pages Posted: 7 Feb 2020 Last revised: 27 Apr 2020
Date Written: January 13, 2020
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: Suggested Citation