The Impact of TOM on Prices in the US Housing Market

Darren K. Hayunga () and R. Kelley Pace ()
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Darren K. Hayunga: University of Georgia
R. Kelley Pace: Louisiana State University

The Journal of Real Estate Finance and Economics, 2019, vol. 58, issue 3, No 1, 335-365

Abstract: Abstract Search theory shows that real property prices and marketing durations are simultaneously determined and positively related. Yet, empirical studies find positive, negative, and insignificant parameter estimates on the time-on-the-market (TOM) variable in price models. Using a dataset well suited to the research question, this article investigates reasons for the divergence between the theoretical and empirical results. Our test equations examine the quality of instrumental variables, severe overpricing, atypicality, structure quality, loss aversion, market tightness as well as measures unique to our data such as sellers’ income levels, reasons for sale, and urgency. We find that weak instrumental variables account for the varied empirical relations between transaction prices and TOM.

Keywords: Time on the market; Instrumental variables; Omitted variables; Simultaneity; Urgency; Income; Reasons for sale (search for similar items in EconPapers)
JEL-codes: R31 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s11146-018-9657-0

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