Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/175843
Authors: 
Levy, Daniel
Snir, Avichai
Year of Publication: 
2018
Abstract: 
We use novel and unique data to study the effect of price changes in the market for luxury and middle class homes. We find that luxury home sales respond less to price changes than the middle-class home sales; in the market for luxury homes, past prices affect current prices; luxury home prices persist; and prices of luxury homes are stickier than prices of middle-class homes. Recent macroeconomic models predict that housing markets can have counter-cyclical effect, if home prices are flexible. Our findings imply that home prices, especially luxury home prices, may not be flexible enough to generate such effect.
Subjects: 
Housing market
Luxury housing
Housing demand
Price rigidity
Sticky prices
Predictability
Veblen Effect
JEL: 
E31
E32
R21
G14
D12
Document Type: 
Preprint

Files in This Item:
File
Size
643.68 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.