How contagious is a pandemic to the housing market? evidence from day-by-day sales and minute-by-minute bids after a Covid-19 policy intervention

We exploit day-by-day transaction and minute-by-minute auction data from Norway in order to estimate the effect on the housing market of the government intervention on 12 March 2020 and further effects from economic relief packages announced on 20 March and 27 March. On 12 March, Norway was placed in lockdown in order to combat Covid-19. Using a discontinuity design, we seek to demonstrate that there exists a discontinuity in transaction volume, sell-ask spread, sell-prediction spread, number of bidders, number of bids, and frequency of single-bidder auctions before and after the policy intervention. Using a hedonic model to control for composition and quality effects, we estimate the magnitude of the change in prices in the days immediately after the policy shock. We uncover mechanisms underlying the reduction in volume and prices by studying both seller and buyer behavior, i.e. we map the frequencies of desperate sales on the sell side and exploitative bids on the buy side change immediately after the policy intervention. We proceed to investigate effects on the same set of variables from announcements of relief packages, and we link market dynamics metrics to measures of sentiment, mobility, and news about the medical situation.