Misinformed speculators and mispricing in the housing market

Alex Chinco, Christopher Mayer

Research output: Contribution to journalArticlepeer-review


This paper examines the contribution of out-of-town second-house buyers to mispricing in the housing market. We show that demand from out-of-town second-house buyers during the mid 2000s predicted not only house-price appreciation rates but also implied-to-actual-rent-ratio appreciation rates, a proxy for mispricing. We then apply a novel identification strategy to address the issue of reverse causality. We give supporting evidence that out-of-town second-house buyers behaved like misinformed speculators, earning lower capital gains (misinformed) and consuming smaller dividends (speculators).

Original languageEnglish (US)
Pages (from-to)486-522
Number of pages37
JournalReview of Financial Studies
Issue number2
StatePublished - Feb 1 2016

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


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