Behavioral changes in the housing market before and after the Covid-19 lockdown

Abstract

We exploit unique Norwegian day-by-day transaction and hour-by-hour bidding logs data in order to examine how market participants reacted to the spreading news of Covid-19 in early March 2020, the lockdown on March 12, and the re-opening on April 20. We observe changes on the date of the lockdown in transaction volumes, sell-prediction spreads, exploitative bidding behavior, and seller confidence. However, when we compare observed price developments with our estimated counter-factual price developments, we find that about half of the total fall in prices had already occurred before the lockdown was implemented. The reopening completely reverses the lockdown effect on prices. We show that voluntary behavioral changes, as well as lockdown and re-opening effects, are visible in various measures of social mobility, and that changes in daily news sentiment correlate with the abnormal price movements during this period.