Local Experiences, Attention and Spillovers in the Housing Market

Recent local price growth explains differences in search behavior across prospective homebuyers. Those experiencing higher growth in their postcode of residence search more broadly across locations and house characteristics, without changing attention devoted to individual sales listings. Effects are stronger for homeowners, in particular those living in less wealthy areas and looking for a new primary residence. These findings are not consistent with local price growth influencing behavior through extrapolative expectations, and rather line up with the predictions of a collateral constraints channel. The expansion of search breadth leads to widespread spillovers onto house sales within a metropolitan area