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Speculators and Middlemen: The Strategy and Performance of Investors in the Housing Market

  • Patrick Bayer
  • Christopher Geissler
  • Kyle Mangum
  • James W. Roberts

Housing market transactions are a matter of public record and thus provide a rare opportunity to analyze the behavior, performance, and strategies of individual investors. Using data for all housing transactions in the Los Angeles area from 1988-2009, this paper provides empirical evidence on investor behavior that is consistent with several rationales for speculative investment in the finance literature, including the roles of middlemen and naïve speculators. Speculative activity by novice investors increased sharply in the recent housing boom. These investors earned little more than the market rate of appreciation and demonstrated no ability to foresee market price movements.

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File URL: http://www.nber.org/papers/w16784.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16784.

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Date of creation: Feb 2011
Date of revision:
Handle: RePEc:nbr:nberwo:16784
Note: EFG PE
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  1. De Long, J Bradford & Andrei Shleifer & Lawrence H. Summers & Robert J. Waldmann, 1990. "Noise Trader Risk in Financial Markets," Journal of Political Economy, University of Chicago Press, vol. 98(4), pages 703-38, August.
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