Search and Credit Frictions in the Housing Market

Miroslav Gabrovski and Victor Ortego-Marti

No 202016, Working Papers from University of California at Riverside, Department of Economics

Abstract: This paper develops a model of the housing market with search and credit frictions. The interaction between the two sources of friction gives rise to a novel channel through which the financial sector affects prices and liquidity in the housing market and leads to multiple equilibria. In a numerical exercise, we gauge the relative contribution of credit market shocks to the observed patterns in housing prices, time-to-sell, and mortgage debt-to-price ratio in the U.S. data prior to the $2007$ housing market crash. Our results suggest that shocks associated with the credit frictions channel had a relatively larger impact on the observed build-up in mortgage debt and lack of change in time-to-sell than on the increase in prices.

Keywords: Housing market; Credit Frictions; Search and Matching; Multiple Equilibria; Mortgages (search for similar items in EconPapers)
JEL-codes: E2 E32 R21 R31 (search for similar items in EconPapers)
Date: 2020-08
New Economics Papers: this item is included in nep-ban, nep-dge, nep-mac and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://economics.ucr.edu/repec/ucr/wpaper/202016.pdf First version, 2020 (application/pdf)

Related works:
Journal Article: Search and credit frictions in the housing market (2021)
Working Paper: Search and Credit Frictions in the Housing Market (2018)
Working Paper: Search and Credit Frictions in the Housing Market (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ucr:wpaper:202016

Access Statistics for this paper

More papers in Working Papers from University of California at Riverside, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Kelvin Mac (kelvin.mac@ucr.edu).