Temperatures and search: evidence from the housing market

Abstract

Climate dynamics and weather variations affect search and matching processes. We provide evidence for the housing market by analyzing the impact of high temperatures on housing search. By leveraging on unique data for Italy, tracking online clicks and contact requests for 2 million home listings at high frequency, and physical appointments scheduled by buyers and sellers with real estate agents, we show that housing demand drops in hotter months. House prices are on average permanently reduced as sellers revise down those of properties that are not climate-safe -- houses with low energy efficiency class (where energy expenditures are the highest) and no outdoor living spaces (providing shelter from the heat). These findings, particularly valuable in light of the ongoing climate change, suggest a climate-related preference shift induced by the occurrence of hot temperatures, and document a direct channel for weather variations to affect household wealth.

Keywords: climate change, temperatures, housing search, house prices

JEL Classification: C78, G1, Q54, R21, R31