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Housing purchases and the dynamics of housing wealth

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  • Bover, Olympia

Abstract

I 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 significant 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.

Suggested Citation

  • Bover, Olympia, 2010. "Housing purchases and the dynamics of housing wealth," CEPR Discussion Papers 8128, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:8128
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    References listed on IDEAS

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    More about this item

    Keywords

    (S; s) rule; adaptive expectations; house purchases; Household finance; housing returns; secondary homes;

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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