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Extrapolation and house price overreaction: Evidence from local jurisdiction mergers

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  • Deng, Kuang Kuang
  • Lang, Henan
  • Zhou, Xiaoxia

Abstract

•House price overreacts to positive policy shock during the boom period.•No overreaction of house prices after a similar policy shock during the bust period.•Home purchasers’ expectations of future price change are based on lagged price growth.•Short-term speculators may be the main contributor to the housing price overreaction.

Suggested Citation

  • Deng, Kuang Kuang & Lang, Henan & Zhou, Xiaoxia, 2022. "Extrapolation and house price overreaction: Evidence from local jurisdiction mergers," Finance Research Letters, Elsevier, vol. 44(C).
    • Handle: RePEc:eee:finlet:v:44:y:2022:i:c:s1544612321001483
    DOI: 10.1016/j.frl.2021.102067
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    References listed on IDEAS

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    Cited by:

    1. Lee, Hung-Wei & Lin, Che-Chun & Tsai, I-Chun, 2023. "Another application of call options: Explaining the divergence between the housing market and the rental market," Finance Research Letters, Elsevier, vol. 53(C).

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