House prices rise can spread through social networks like a virus and your Facebook friends can have too much of an influence on what one pays for a house.
According to researchers from the US National Bureau of Economic Research, people whose friends are experiencing house price rises were willing to pay more for a house.
The study, done by Facebook economist Michael Bailey, Harvard University's Ruiqing Cao and Johannes Stroebel and Theresa Kuchler from New York University's Stern School of Business, combined Facebook survey data with public record information on housing transactions.
They looked at friends who were "geographically distant" and their social networks to find the effects, nzherald.co.nz reported.
"If people's far-off friends were from places where house prices rose by five percent stronger than expected in the last two years, they were more likely to buy a house by 3.1 percent, bought a house 1.7 percent larger and paid 3.3 percent more for a given house," the findings showed.
The sample was enormous, matching "more than 520,000 housing transactions in Los Angeles county since 1993 to the Facebook account of the respective home buyer".
Also, individuals whose friends experienced larger recent house price increases were more optimistic about property investments, the study added.
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