Dream Chasers: The Draw and the Downside of Following House Price Signals

Abstract

We study labor re-allocation during the 2000s house price boom using detailed career-path data for 32 million workers. We show large flows of workers into realty from virtually all parts of the skill, wage, and education spectrums, especially following instances of strong local house price growth. Those drawn in during the peak ended up in careers paying substantially less than non-entrants that were working in the same occupation and MSA. Comparing within entrants, those in areas with higher non-fundamental house price growth end up in significantly lower-paying occupations. These disparities persist through the end of our sample in 2017.