Momentum Traders in the Housing Market: Survey Evidence and a Search Model

Piazzesi, Monika; Schneider, Martin

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Momentum Traders in the Housing Market: Survey Evidence and a Search Model

NBER Working Paper No. w14669

20 Pages Posted: 25 Jan 2009 Last revised: 1 Aug 2022

See all articles by Monika Piazzesi

Monika Piazzesi

Stanford University; University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

Martin Schneider

Stanford University

There are 2 versions of this paper

Date Written: January 2009

Abstract

This paper studies household beliefs during the recent US housing boom. The first part presents evidence from the Michigan Survey of Consumers. To characterize the heterogeneity in households' views about housing and the economy, we perform a cluster analysis on survey responses at different stages of the boom. The estimation always finds a small cluster of households who believe it is a good time to buy a house because house prices will rise further. The size of this "momentum" cluster doubled towards the end of the boom. The second part of the paper provides a simple search model of the housing market to show how a small number of optimistic investors can have a large effect on prices without buying a large share of the housing stock.

Suggested Citation: Suggested Citation

Piazzesi, Monika and Schneider, Martin, Momentum Traders in the Housing Market: Survey Evidence and a Search Model (January 2009). NBER Working Paper No. w14669, Available at SSRN: https://ssrn.com/abstract=1332608