Misinformed speculators and mispricing in the housing market

• Autores: Alex Chinco, Christopher Mayer
• Localización: Review of Financial Studies, ISSN-e 1465-7368, Vol. 29, Nº. 2, 2016, págs. 486-522
• Idioma: inglés
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• Resumen

  • This paper examines the contribution of out-of-town second-house buyers to mispricing in the housing market. We show that demand from out-of-town second-house buyers during the mid 2000s predicted not only house-price appreciation rates but also implied-to-actual-rent-ratio appreciation rates, a proxy for mispricing. We then apply a novel identification strategy to address the issue of reverse causality. We give supporting evidence that out-of-town second-house buyers behaved like misinformed speculators, earning lower capital gains (misinformed) and consuming smaller dividends (speculators).