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Facebook is motivating home buying decisions

This report shows why you may want to boost your posts on Facebook. Read the article online here.

How Your Facebook Friends Can Push You to Buy a Home

imagesBy Clare Trapasso,

If all your Facebook friends jumped off a bridge, would you? Probably not. But if they all bought big homes, you’re more likely to follow suit, according to a new study.

Facebook users whose friends have had a good homeownership experience are more likely to bite the bullet and purchase their own residence, according to a working paper published this month by the National Bureau of Economic Research.

The researchers came to their conclusions after looking at nearly 1,250 responses to a housing market survey distributed to Facebook users in Los Angeles. They also analyzed L.A. public deeds records of nearly 434,000 renters and more than 1 million homeowners.

“You hear everyone’s making money in the housing market and suddenly you think it’s a better investment,” says New York University finance professor Johannes Stroebel, one of the authors of the report. “It shows that your social network and your experiences within your social network are an important factor of your financial decision making.”

Folks whose online networks posted about their home values going up more than 5% over the past two years were 3.1% more likely to close on their own personal palaces over the next two years, according to the study. They were also 1.7% more likely to buy a bigger home and 3.1% more inclined to pay more for it. They also were willing to make a 7% larger down payment.

But on the flip side, those whose online pals didn’t fare quite as well in the housing market are more likely to sell their homes (by about 1%) and become renters, according to the study. They’ll even sell their property for less.

“Social media amplifies the positive and negative impact of homeownership,” says Jason Dorsey, chief strategy officer at the Center for Generational Kinetics, a millennial research and marketing firm based in Austin, TX. Buying a home “seems more achievable because you know someone who’s actually gone through the process. It makes it more within reach.”

But the reverse is true as well.

“Millennials are more hesitant to buy if their friends are posting about the stress and strain of being a homeowner,” Dorsey says.

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