Essays on the Impact of Sentiment on Real Estate Investments

The sentiments of market participants always severely impacted transactions and should be always considered. The current crisis of the European Monetary Union as well as the Post-Lehmann-Era has been very well illustrating how sentiment affects not only stock markets but also physical markets. Reactions of market participants can hardly be explained with underlying fundamentals and efficient market theory. With regard to international capital markets this book conducts an analysis of the impact of investor sentiment on the return of the real estate-specific investment vehicle "Real Estate Investment Trust (REIT)" by applying a GARCH-Model. In addition, this work investigates the effects of investor sentiment on the return and the underlying volatilities of REITs and Non-REITs during the financial crisis. The formulated hypotheses are tested for validity in a GARCH-Model. In parallel to capital markets and therewith changing from an indirect Real Estate investment perspective to a direct perspective the author conducts an analysis if consumer sentiment impacts the household decision to buy a new home in the US. Therefore a dataset with 385 monthly observations from 1978 to 2010 is tested by a component model. This book clarifies if real estate decisions - both indirect and direct - are affected by investor and consumer sentiment and how severely the sentiment should be considered.