Determinants of house buyers’ expected holding periods in boom and bust markets in California
Real estate market is known for displaying buying and selling behavior that does not conform to traditional economic theories such as rational expectation or expected utility. Mounting evidence of anomalous observations appear to be supported by other theories, such as prospect theory, which in particular helps explain the disposition effect – sellers are too quick to sell when prices are climbing and hold on to properties longer when prices are plummeting. While this evidence is widely documented in housing studies based on data on realized holding periods (i.e., ex post), this study explores factors that may motivate homeowners to alter their expected holding horizons (i.e., ex ante) to form new preferred holding periods that may be shorter or longer than those planned during house search.
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International Journal of Housing Markets and Analysis
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