A Structural Model of a Housing Market with Friction

Chang-I Hua ()
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Chang-I Hua: Institute for Physical Planning & Information

International Real Estate Review, 2017, vol. 20, issue 4, 397-416

Abstract: This paper presents a structural model of nine equations that connect the unobserved housing service and the observed house transaction markets. Endogenous variables include two prices, supply, demand, stock of houses for sale on the market, average time on the market, stock of all houses, total vacant houses, and average house size. The search process of households for houses generates a stochastic process which results in an uncleared stock of houses on the market. The friction cost is specifically measured. The model should improve many practices in housing market research, and may be extended to other durable goods markets and beyond.

Keywords: Housing Market; Structural Model; Equilibrium; Uncleared Stock; Friction (search for similar items in EconPapers)
JEL-codes: L85 (search for similar items in EconPapers)
Date: 2017
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