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How much did pandemic uncertainty affect real-estate speculation? Evidence from on-market valuation of for-sale versus rental properties

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  • Alexander M. Petersen

Abstract

We exploit a panel of Zillow Inc. property valuations to estimate the excess real-estate price growth observed in three California cities that is attributable to speculation triggered by the COVID-19 pandemic. Our research design leverages the counterfactual comparison of properties listed for sale to properties listed for rent, with the latter property class being available for habitation – just not for purchase – and thus neutral to price speculation. We implement a pre/post-2020 difference-in-difference estimation, which utilizes unit-level matching of otherwise similar sale and rental properties within a 1/2-mile radius of each other to compare differences in (a) 1-month valuation changes and (b) spot valuation uncertainties. Results indicate post-2020 property valuations in Merced and San Jose featured an excess annual price estimate growth of 22% and 14.8% points, respectively, whereas the Fresno market does not feature statistically significant excess growth.

Suggested Citation

  • Alexander M. Petersen, 2025. "How much did pandemic uncertainty affect real-estate speculation? Evidence from on-market valuation of for-sale versus rental properties," Applied Economics Letters, Taylor & Francis Journals, vol. 32(9), pages 1295-1299, May.
    • Handle: RePEc:taf:apeclt:v:32:y:2025:i:9:p:1295-1299
    DOI: 10.1080/13504851.2024.2302898
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