American Economic Journal:
Macroeconomics
ISSN 1945-7707 (Print) | ISSN 1945-7715 (Online)
History Dependence in the Housing Market
American Economic Journal: Macroeconomics
(pp. 420–43)
Abstract
Using data on the universe of housing transactions in England and Wales over a 20-year period, we document that sale prices and selling propensities are affected by house prices prevailing in the period in which properties were previously bought. Using administrative data on mortgages, we show that cognitive frictions explain most of the history dependence in sale prices, whereas credit frictions are more relevant for selling propensities. We corroborate our analysis with data on online house listings, and we estimate the impact of history dependence on the collapse and slow recovery of housing market activity in the postcrisis period.Citation
Bracke, Philippe, and Silvana Tenreyro. 2021. "History Dependence in the Housing Market." American Economic Journal: Macroeconomics 13 (2): 420–43. DOI: 10.1257/mac.20180241Additional Materials
JEL Classification
- E32 Business Fluctuations; Cycles
- R21 Urban, Rural, Regional, Real Estate, and Transportation Economics: Housing Demand
- R31 Housing Supply and Markets