Home, Safe Home: Cross-Country Monitoring Framework for Vulnerabilities in the Residential Real Estate Sector

Bengtsson, Elias; Grothe, Magdalena; Lepers, Étienne

doi:10.2139/ssrn.3032414

Cited by 1 publication

(1 citation statement)

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“…Scherbina and Schlusche (2012) argue that bubbles are ubiquitous in residential real estate markets as such markets are dominated by 'unsophisticated households' who often develop optimistic views by overextrapolating from past price movements. 1 There are far reaching and material implications of a convulsive real estate market for the real economy (Bengtsson et al, 2018) and the financial sector (Carmichael & Coën, 2018). There is, however, scant field evidence, in this critically important growth-of-bubble market phase, regarding the factors that persuade these real estate bidders to bid high.…”

Section: Introductionmentioning

confidence: 99%

Auction Competitive Dynamics and Guide (List) Prices in a Bubble Market

Ryan

Brannigan

2022

Accounting, Finance &Amp; Governance Review

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The auction literature finds that competition drives price outcomes and has both rational and psychological components. In bubble markets, emotional factors are heightened, potentially impacting on the interaction between the strategic setting of guide prices by auctioneers, competitive bidding and final auction price outcomes, themes not explored in the extant literature. In a real estate bubble, we find evidence that auction prices anchor on guide prices and that any emotional impact on competitive bidding associated with auction fever does not occlude the assimilative role for the guide price as an anchor. Interestingly, however, we find evidence consistent with real estate agents systematically setting guide prices at deep discounts relative to fundamentals, prima facie consistent with a belief in the reversal-of-the-anchoring effect, suggesting their actions may, paradoxically, dampen the effect of the bubble rather than amplify it.

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Section: Introductionmentioning

confidence: 99%