Did real estate professionals anticipate the 2007-2008 financial crisis? Evidence from insider trading in the REITs
Published in The Journal of Real Estate Finance and Economics, 2021
Real estate professionals in REITs anticipated the 2007-2008 financial crisis by significantly selling their holdings as early as 2004, which refutes the competing “biased belief hypothesis” that they were over-optimistic. Unlike many experts in the broader financial industry, these sophisticated real estate insiders successfully foresaw the systemic risk in the housing market, suggesting their trading patterns can act as an early warning signal for sector-wide bubbles.