Housing purchases and the dynamics of housing wealth
AbstractI model the purchase behavior of main and secondary housing by Spanish households using the panel sample from the first two waves of the Spanish household finance survey (EFF). I estimate discrete hazard models using retrospective and within-period purchase sequences. I also estimate an (S,s) model combining transactions data with longitudinal information on household wealth and housing stock values. I look at the role of adaptive expectations about the rate of return on housing and find they have a positive and signifi cant effect on the demand for houses. This is true for historical and within-period purchase probabilities as well as for the target ratio of housing wealth to total wealth. The volatility of house price growth has a negative effect on purchases for investment but a positive one on purchases for consumption.
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Bibliographic InfoPaper provided by Banco de Espa�a in its series Banco de Espa�a Working Papers with number 1036.
Length: 43 pages
Date of creation: Dec 2010
Date of revision:
Household finance; house purchases; secondary homes; housing returns; adaptive expectations; (S; s) rule;
Other versions of this item:
- Bover, Olympia, 2010. "Housing purchases and the dynamics of housing wealth," CEPR Discussion Papers 8128, C.E.P.R. Discussion Papers.
- D14 - Microeconomics - - Household Behavior - - - Personal Finance
- G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
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