JUE Insight: COVID-19 and household preference for urban density in China.

This paper investigates the effect of COVID-19 on both housing prices and housing price gradients in China using transaction level data from 60 Chinese cities. After using a difference-in-differences (DID) specification to disentangle the confounding effects of China's annual Spring Festival, we find that housing prices decreased by two percent immediately after the COVID-19 outbreak but gradually recovered by September 2020. Moreover, our findings suggest that COVID-19 flattens the horizontal housing price gradient, reduces the price premium for living in tall buildings, and changes the vertical gradient within residential buildings. This is likely explained by the changing household preferences towards low-density areas associated with lower infection risk.

High-Speed railways and the spread of Covid-19.

High-speed railways (HSRs) greatly decrease transportation costs and facilitate the movement of goods, services, and passengers across cities. In the context of the Covid-19 pandemic, however, HSRs may contribute to the cross-regional spread of the new coronavirus. This paper evaluates the role of HSRs in spreading Covid-19 from Wuhan to other Chinese cities. We use train frequencies in 1971 and 1990 as instrumental variables. Empirical results from gravity models demonstrate that one more HSR train originating from Wuhan each day before the Wuhan lockdown increases the cumulative number of Covid-19 cases in a city by about 10 percent. The empirical analysis suggests that other transportation modes, including normal-speed trains and airline flights, also contribute to the spread of Covid-19, but their effects are smaller than the effect of HSRs. This paper's findings indicate that transportation infrastructures, especially HSR trains originating from a city where a pandemic broke out, can be important factors promoting the spread of an infectious disease.

Local Housing Market Sentiments and Returns: Evidence from China.

This paper examines the impacts of local housing sentiments on the housing price dynamics of China. With a massive second-hand transaction dataset, we construct monthly local housing sentiment indices for 18 major cities in China from January 2016 to October 2020. We create three sentiment proxies representing the local housing market liquidity and speculative behaviors from the transaction dataset and then use partial least squares (PLS) to extract a recursive look-ahead-bias-free local housing sentiment index for each city considered. The local housing sentiments are shown to have robust predictive powers for future housing returns with a salient short-run underreaction and long-run overreaction pattern. Further analysis shows that local housing sentiment impacts are asymmetric, and housing returns in cities with relatively inelastic housing supply are more sensitive to local housing sentiments. We also document a significant feedback effect between housing returns and market sentiments, indicating the existence of a pricing-sentiment spiral which could potentially enhance the ongoing market fever of Chinese housing markets. The main estimation results are robust to alternative sentiment extraction methods and alternative sentiment proxies, and consistent for the sample period before COVID-19.