Is Facebook Chatter Behind the Housing Bubble?

June 12, 2017

A paper authored by four economists analyzed more than 1,200 Facebook accounts in Los Angeles County. The study noted their interactions with far away Facebook friends and matched them with property transaction records. They found that a renter whose friends report housing prices in their market increased 5 percent is more likely to buy a house and pay more for it. Also the reverse it true. If you talk to a lot of friends in markets where housing prices are stable or seen small increases, you are less willing to spend lots of money on real estate.

“Talking to your friends affects your beliefs about housing market investments in the direction of your friends experiences,” wrote Theresa Kuchler, a New York University professor and one of the authors of the paper.

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