Money Illusion and Residential Real Estate Transfers

James E. Larsen ()
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James E. Larsen: Department of Finance, Insurance and Real Estate Wright State University Dayton, Ohio 45435, http://www.wright.edu/coba/fin/

Journal of Real Estate Research, 1989, vol. 4, issue 1, 13-19

Abstract: This paper reports the results of a study of single-family, detached home transfers, conducted to determine if rational expectations holds as a function of owner-tenure. A counter-rational expectations notion, which has intuitive appeal, is that sellers with relatively long owner-tenure may be more willing to accept "low" offers compared to sellers with short owner-tenure. The study supports this notion. Owner-tenure is found to be significantly related to the real profit realized by sellers. This implies that rational expectations does not hold as a function of owner-tenure and that owner-tenure is a relevant factor for buyers to consider in formulating a purchase offer.

JEL-codes: L85 (search for similar items in EconPapers)
Date: 1989
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