HOUSEHOLD MIGRATION AND HOUSING MARKETS

Abstract

Housing market is one of the most important markets in the U.S. It is widely held that heterogeneity in the housing market plays an important part in affecting housing prices. My dissertation contributes to the literature by exploring the role of household migration and heterogeneous participants in the housing market at both the macro level and micro level.Chapter 2 studies why and how household migration could contribute to spillovers of local housing booms. The chapter builds a theoretical framework and captures a multi-market equilibrium with household migration. Using IRS migration data and Housing Price Index data from FHFA, the chapter establishes the existence and magnitude of housing boom spillover effects through migration. It is found that housing prices increase with the number of migrants, and would increase more if migrants are from booming places. An increase in the fraction of migration inflow from booming counties by 10 percentage points results in an increase in the annual change in housing prices by 1 percentage point. Furthermore, the magnitude of the housing boom spillover effects is 62 percent. In Chapter 3, I explore the differences between out-of-state home buyers and in-state home buyers in housing transactions and also investigate whether buyers' individual characteristics such as income and wealth could play an important role in determining housing prices. The chapter uses novel housing transactions data sets from TMLS and individual characteristics data from InfoUSA. Existing literature believed that out-of-state buyers pay significant price premiums for similar homes because of higher search costs or information disadvantages. The chapter revisits previous conclusions and finds that out-of-state buyers don't pay higher prices. Rather, it is the income and wealth of buyers that matter in affecting the housing price premiums. In Chapter 4, I focus on what listing price strategies sellers would take and how sellers' heterogeneous characteristics affect their pricing strategies. By using data from TMLS and InfoUSA, I find that sellers' moving distance could affect their motivations to sell. External movers have the tendency to underprice and set the listing price around 3 percent lower compared with internal movers. Furthermore, it is found that elder sellers tend to overprice when setting the initial list price to gain more bargaining power.