Speculators and Middlemen: The Role of Intermediaries in the Housing Market
AbstractWe document and study the strategy and performance of two distinct types of investors in Los Angeles between 1988-2009 who purchased homes with the intention of quickly re-selling: middlemen buy at below-market prices from motivated sellers and re-sell quickly; speculators target periods and areas of rapid market appreciation. Unlike that of middlemen, speculative activity increased sharply in the housing boom and was strongly associated with subsequent price bubbles at both the metropolitan and neighborhood levels. We present evidence suggesting that speculation fueled excess short-term appreciation rather than reflected the ability of speculators to predict when and where such appreciation would occur.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16784.
Date of creation: Feb 2011
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Find related papers by JEL classification:
- E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
- G01 - Financial Economics - - General - - - Financial Crises
- G1 - Financial Economics - - General Financial Markets
- G12 - Financial Economics - - General Financial Markets - - - Asset Pricing
- G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies
- G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
- H7 - Public Economics - - State and Local Government; Intergovernmental Relations
- R0 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General
- R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
- R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Production Analysis, and Firm Location - - - Housing Supply and Markets
- R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies
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- J. Bradford De Long & Andrei Shleifer & Lawrence H. Summers & Robert J. Waldmann, .
"Noise Trader Risk in Financial Markets,"
J. Bradford De Long's Working Papers
_124, University of California at Berkeley, Economics Department.
- Yuet-Yee Wong & Randall Wright, 2011. "Buyers, Sellers and Middlemen: Variations on Search-Theoretic Themes," NBER Working Papers 17511, National Bureau of Economic Research, Inc.
- Andrew Haughwout & Donghoon Lee & Joseph Tracy & Wilbert van der Klaauw, 2011. "Real estate investors, the leverage cycle, and the housing market crisis," Staff Reports 514, Federal Reserve Bank of New York.
- Fernando Ferreira & Joseph Gyourko, 2011. "Anatomy of the Beginning of the Housing Boom: U.S. Neighborhoods and Metropolitan Areas, 1993-2009," NBER Working Papers 17374, National Bureau of Economic Research, Inc.
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