Individuals form economic expectations for a given region by extrapolating from the economic outcomes of another geographic area, a phenomenon we term 'spatial extrapolation.' We exploit the scenario when Out-of-town (OOT) buyers purchase property in places different from their previous...

Housing markets are sensitive to the appropriately measured cost of capital. Decreases in the real interest rate lead to decreases in the rental value of housing for households and increases in the value price of housing for developers. Prior evidence suggests factor shares to land and capital...

Based on a behavioral stock-flow housing market model in which the expectation formation behavior of boundedly rational and heterogeneous investors may generate endogenous boom-bust cycles, we explore whether central banks can stabilize housing markets via the interest rate. Using a mix of...