A search-theoretic model of the rental and homeownership markets

Masanori Kashiwagi

Journal of Housing Economics, 2014, vol. 26, issue C, 33-47

Abstract: This paper presents a simple model of the rental and homeownership markets in a unified framework. The paper then investigates the model’s positive and normative properties, applying ideas developed in search and matching theory. I analytically address the comparative static and welfare implications of the model. In addition, as an extension toward realism, I consider a version of the model with free entry of housing supply, while the benchmark model assumes exogenous housing supply. To examine the benchmark model’s dynamics, I generate the impulse responses of house prices, rents, and housing occupancy patterns to an increase in housing supply and show that house prices react more than rents in the short run.

Keywords: House prices; Rents; Search and matching (search for similar items in EconPapers)
JEL-codes: E30 R30 R32 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jhouse:v:26:y:2014:i:c:p:33-47

DOI: 10.1016/j.jhe.2014.07.001

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