Speculative dynamics of prices and volume

Anthony A. DeFusco, Charles G. Nathanson*, Eric Zwick

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

9 Scopus citations


Using data on 50 million home sales from the last U.S. housing cycle, we document that much of the variation in volume came from the rise and fall in speculation. Cities with larger speculative booms have larger price booms, sharper increases in unsold listings as the market turns, and more severe busts. We present a model in which predictable price increases endogenously attract short-term buyers more than long-term buyers. Short-term buyers amplify volume by selling faster and destabilize prices through positive feedback. Our model matches key aggregate patterns, including the lead–lag price–volume relation and a sharp rise in inventories.

Original languageEnglish (US)
Pages (from-to)205-229
Number of pages25
JournalJournal of Financial Economics
Issue number1
StatePublished - Oct 2022


  • Bubbles
  • Housing cycles
  • Speculation
  • Transaction volume

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics
  • Strategy and Management


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