Expectations during the U.S. housing boom : inferring beliefs from actions

Itzhak Ben-David (The Ohio State University and NBER), Pascal Towbin (Swiss National Bank), Sebastian Weber (International Monetary Fund)

We infer the role of price expectations in forming the U.S. housing boom in the early-2000s from examining housing inventories. We use a reduced form model to show that agents invest in vacant homes when they anticipate prices will increase. Empirically, vacancy can discriminate between price movements related to shocks to demand for housing services (low vacancy) and shocks to expectations (high vacancy). Using a structural vector autoregression with sign restrictions, we show that expectation shocks were a prime factor explaining the boom particularly in the Sand States, which experienced unprecedented booms

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Year of publication:	[2019]
Authors:	Ben-David, Itzhak ; Towbin, Pascal ; Weber, Sebastian
Publisher:	[Columbus, Ohio] : The Ohio State University, Fisher College of Business, Charles A. Dice Center for Research in Financial Economics
Subject:	Expectations \| Real Estate \| Boom \| Bust \| Bubble \| Vacancy \| Spekulationsblase \| Bubbles \| USA \| United States \| Immobilienpreis \| Real estate price \| Erwartungsbildung \| Expectation formation \| Immobilienmarkt \| Real estate market \| Konjunktur \| Business cycle \| Hypothek \| Mortgage