Profiting from Real Estate: So Easy a Congressman Can Do It

71 Pages Posted: 8 Apr 2021 Last revised: 26 May 2022

See all articles by Markus Baldauf

Markus Baldauf

University of British Columbia (UBC) - Division of Finance

Jack Y Favilukis

University of British Columbia (UBC) - Division of Finance

Lorenzo Garlappi

University of British Columbia (UBC) - Sauder School of Business

Keling Zheng

University of British Columbia (UBC) - Division of Finance

Date Written: May 24, 2022

Abstract

We provide the first analysis of U.S. Congress members’ real estate activity by combining their financial disclosures with property-level transactions. Active Congress members outperform average homeowners by 3.24% annually; they also outperform former members, financial professionals, and doctors. National-level market timing explains 30\% of the outperformance, neighborhood-level explains 50%, and hyper-local or property-specific factors explain the remainder. A “buy-sell” index of Congress members’ transactions forecasts returns on the U.S. housing index. These findings suggest that superior information drives most of the outperformance. We fail to detect side-payments or bribery, however Federal transfers are higher to places where Congress members own.

Keywords: Real estate, housing returns, U.S. Congress, politicians

JEL Classification: E43, G21, J11

Suggested Citation

Baldauf, Markus and Favilukis, Jack Y and Garlappi, Lorenzo and Zheng, Keling, Profiting from Real Estate: So Easy a Congressman Can Do It (May 24, 2022). Available at SSRN: https://ssrn.com/abstract=3801378 or http://dx.doi.org/10.2139/ssrn.3801378

Markus Baldauf

University of British Columbia (UBC) - Division of Finance ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada

Jack Y Favilukis (Contact Author)

University of British Columbia (UBC) - Division of Finance ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada

Lorenzo Garlappi

University of British Columbia (UBC) - Sauder School of Business ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada

Keling Zheng

University of British Columbia (UBC) - Division of Finance ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
157
Abstract Views
752
rank
260,227
PlumX Metrics