Online Information Search, Market Fundamentals and Apartment Real Estate
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We examine the association between online apartment rental searches and fundamental real estate market variables namely, vacancy rates, rental rates and real estate asset price returns. We find that consumer real estate searches are significantly associated with the market fundamentals after controlling for known determinants of these variables. In particular, we show that apartment rental-related online searches are endogenously and contemporaneously associated with reduced vacancy rate. However, the association between the searches and rental rates is not significant. The searches are also contemporaneously associated with positive returns on the appraised values of multifamily assets. There is some evidence that the searches are fundamentally associated with REIT returns in the short run and that REIT investors watch the online search trends to inform their stock pricing decisions.
KeywordsInformation search Apartment markets Internet
An earlier version of this paper won the best manuscript award at the American Real Estate Society (ARES) annual conference in Seattle (2011). Authors are thankful to Jonathan Wiley, Karen Gibler and the anonymous reviewers for their intellectual contributions. The paper has benefitted from the participants at the AREUEA mid-year conference (2011, Washington DC). Feedback from the following persons is highly appreciated: Vivek Sah, Julian Diaz III, Tim Riddiough, Jay Hartzell, Alan Tidwell, Philip Seagraves, Julia Freybote, Dongshin Kim, SungHan Ro, Frank Gyamfi-Yeboah, Kenneth Soyeh, Patrick Smith, Alan Ferguson, Yu Liu, Paul Seguin.
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