Profiting from Real Estate: So Easy a Congressman can do it
42 Pages Posted: 8 Apr 2021
Date Written: March 10, 2021
We use financial disclosures to construct the returns on real estate transactions by U.S. Congress members. Active Congress members outperform non-Congress members by 3.25% per year. They outperform financial professionals, doctors, and former Congress members by similar amounts. About 1/3 of the total outperformance is due to national-level market timing. Consistent with this, a Buy-Sell index of transactions of active Congress members forecasts the returns on the aggregate U.S. housing index, but a similar index of transactions of inactive Congress members does not. Another 1/2 of the total outperformance is due to city- or neighborhood-level timing, with the remainder being either hyper-local or specific to the actual house purchased. In regards to the latter, an analysis of transactions prior to, or subsequent to the Congress member's fails to find broad based evidence of bribery.
JEL Classification: E43, G21, J11
Suggested Citation: Suggested Citation