How Much Did Pandemic Uncertainty Affect Real-Estate Speculation? Evidence from On-Market Valuation of For-Sale Versus Rental Properties

We exploit a panel of Zillow Inc. property valuations to estimate the excess real-estate price growth attributable to speculation triggered by the COVID-19 pandemic in three California regions. Our research design leverages the counterfactual comparison of price estimates for properties listed for sale relative to those listed for rent, the latter property class being available for habitation -- just not for purchase -- and thus neutral to speculation. We implement a pre/post-2020 difference-in-difference estimation, which utilizes unit-level matching of otherwise similar sale and rental properties within a 1/2-mile radius of each other. Results indicate post-2020 property valuations in Merced and San Jose featured an excess annual price growth of 22 and 14.8 percentage points, respectively, whereas the Fresno market does not feature statistically significant excess price growth.