Online housing search: A gravity model approach

Abstract

In this paper we apply a gravity framework to user-generated data of a large online housing market platform. We show that gravity describes the patterns of inflow and outflow of hits (mouse clicks, etc.) from one municipality to another, where the municipality of the user defines the origin and the municipality of the property that is viewed defines the destination. By distinguishing serious searchers from recreational searchers we demonstrate that the gravity framework describes geographic search patterns of both types of users. The results indicate that recreational search is centered more around the user's location than serious search. However, this finding is driven entirely by differences in border effects as there is no difference in the distance effect. By demonstrating that geographic search patterns of both serious and recreational searchers are explained by their physical locations, we present clear evidence that physical location is an important determinant of economic behavior in the virtual realm too.