Guren, Adam M.2018-07-272018-07-272018-06-01Adam M. Guren, "House Price Momentum and Strategic Complementarity," Journal of Political Economy 126, no. 3 (June 2018): 1172-1218. https://doi.org/10.1086/6972070022-38081537-534Xhttps://hdl.handle.net/2144/30066House prices exhibit substantially more momentum, positive autocorrelation in price changes, than existing theories can explain. I introduce an amplification mechanism to reconcile this discrepancy. Sellers do not set a unilaterally high or low list price because they face a concave demand curve: increasing the price of an above-average-priced house rapidly reduces its sale probability, but cutting the price of a below-average-priced house only slightly improves its sale probability. The resulting strategic complementarity amplifies frictions because sellers gradually adjust their price to stay near average. I provide empirical evidence for concave demand using a quantitative search model that amplifies momentum two- to threefold.1172 - 1218 (47)Social sciencesEconomicsBusiness & economicsReal estate marketSeller behaviorLoss aversionCold marketsSearch modelLiquidityCommerce, management, tourism and servicesArticle10.1086/697207