Price Anchors and Residential Real Estate Bubbles
||Branigan, Clare; Paul Ryan
||Price Anchors and Residential Real Estate Bubbles
||23rd Annual European Real Estate Society Conference in Regensburg, Germany
||This paper is the first study exploring the impact of auction guide (list) prices on auction outcomes in a real estate bubble. Real estate agents through setting auction guide prices may have a role in influencing auction outcomes and potentially inflating the bubble if these guide prices had a part in generating final auction prices which were high relative to fundamentals. We find that winning bidders anchored on the advertised auction guide price consistent with anchoring and insufficient adjustment. However, interestingly, we find evidence consistent with real estate agents systematically setting low guide prices relative to fundamentals suggesting that the actions of the agents may have in fact dampened the effect of the bubble rather than amplifying it.
Post discussion ...
||Real Estate Economics
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