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<p>Leveraging a natural experiment in Hangzhou, we exploit three sequential sub-events of establishing a public school with uncertain quality—the rumor, the official announcement, and the first enrollment of the new school—to trace the dynamic responses of the local housing market. We find that both sellers and buyers adopted cautious strategies in response to the evolving uncertainty. Sellers initially engaged in strategic holding by postponing listings during the rumor phase. Following the official announcement, they aggressively increased listing prices by 29.2% and significantly increased supply. Buyers were also cautious; transaction prices rose by a maximum of only 12.5%, and the transaction rate significantly declined despite the surge in listings. After the first enrollment, when information about the new school’s quality became concrete, the divergence between listing and transaction prices narrowed, and the transaction rate returned to the pre-event level. These patterns indicate that the interaction of cautious strategies of the sellers and buyers in facing with uncertainty resulted in a widening bid-ask spread and reduced market liquidity.</p>

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Responses of home sellers and buyers to the setting-up of a public school of uncertain quality

  • 期刊论文

  • 发表日期：

    2026年4月6日

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  • Yanjiang Zhang,
  • Jinyuan Zhang,
  • Junzi Zhang,
  • Yeting Fu,
  • Shangming Yang

摘要

Leveraging a natural experiment in Hangzhou, we exploit three sequential sub-events of establishing a public school with uncertain quality—the rumor, the official announcement, and the first enrollment of the new school—to trace the dynamic responses of the local housing market. We find that both sellers and buyers adopted cautious strategies in response to the evolving uncertainty. Sellers initially engaged in strategic holding by postponing listings during the rumor phase. Following the official announcement, they aggressively increased listing prices by 29.2% and significantly increased supply. Buyers were also cautious; transaction prices rose by a maximum of only 12.5%, and the transaction rate significantly declined despite the surge in listings. After the first enrollment, when information about the new school’s quality became concrete, the divergence between listing and transaction prices narrowed, and the transaction rate returned to the pre-event level. These patterns indicate that the interaction of cautious strategies of the sellers and buyers in facing with uncertainty resulted in a widening bid-ask spread and reduced market liquidity.