Fifty Shades of the US States: News Media Coverage and Predictability of House Prices

73 Pages Posted: 18 Feb 2024

Date Written: February 1, 2024

Abstract

This paper introduces new housing-media-attention indices for the 50 US states based on the Bloomberg Terminal News Trends (NT) function, which collects articles from various news and social media sources and identifies their content using artificial intelligence tools. The results indicate the state-level housing-media-attention index explains a significant portion of the total variation in future house prices, even when economic fundamentals are considered. Additionally, I find the impact of housing media attention on future house prices is stronger in states with non-recourse mortgage laws, greater land-use regulations, and higher social connectedness among individuals of both low and high socioeconomic status. Out-of-sample forecasting results further suggest that housing media attention has the potential to act as an early indicator of the direction of the housing market.

Keywords: Housing media attention, House prices, Partial least squares, Mortgage laws, Social connectedness, Land use regulations.

JEL Classification: C10, G12, G14, R30, R31

Suggested Citation

Çepni, Oğuzhan, Fifty Shades of the US States: News Media Coverage and Predictability of House Prices (February 1, 2024). Available at SSRN: https://ssrn.com/abstract=4712829 or http://dx.doi.org/10.2139/ssrn.4712829

Oğuzhan Çepni (Contact Author)

Copenhagen Business School ( email )

Solbjerg Plads 3
Frederiksberg C, DK - 2000
Denmark

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