We use the Taiwan housing price
indices from the real estate (spot) and pre-sale (forward)
markets to compare the housing price rigidity of these
two indices. The results show that housing may have asset
characteristics associated with both consumption and
investment. As a result, when housing prices fall, people
may choose to live in the house or rent it to avoid losses
from selling, producing downward housing price rigidity.
In the pre-sale housing market, when housing prices
perform poorly, these assets cannot be provided for consumption,
resulting in less housing price rigidity. The
results show that not all real estate markets are characterized
by loss aversion behaviors. The rigidity of housing
prices results from choices due to consumption demands
(living in a house or renting it). The results
demonstrate that the fall-resistant phenomena in real estate
markets may be due to the relatively diverse uses of
housing assets compared to other assets.