How Sensitive are Sales Prices to Online Price Estimates in the Real Estate Market?
نویسندگان
چکیده
Do online price estimates directly impact sales prices in the real estate market, and if so, how large is that impact? We develop an estimation model that uses the di↵erence between list prices and online price estimates to proxy for house specific unobservables. To account for neighborhood specific unobservables, we use neighborhood first di↵erencing. Using house price estimates, list prices and sales prices collected from Zillow.com, we find the elasticity of sales prices with respect to Zillow estimates to be one, controlling for the aforementioned unobservables as well as observed house attributes. The relation seems causal. The change in Zillow estimates impacts how sales prices adjust from the list prices a month before sales. Furthermore, we find that the elasticity estimate increases with the density of realtors and the accuracy of Zillow estimates across MSAs. Our results imply that online price estimates can have a direct and large impact on real estate price dynamics.
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