Time on Market and the Cash Discount for Condos

Eli Beracha (), Julia Freybote (), Zhenguo Lin () and Michael Seiler ()
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Eli Beracha: Florida International University
Julia Freybote: Portland State University
Zhenguo Lin: Florida International University

The Journal of Real Estate Finance and Economics, 2024, vol. 68, issue 2, No 2, 188-217

Abstract: Abstract We investigate whether the cash discount for condos is affected by time on market (TOM). Theoretically and empirically, we show that the cash discount has two components: First, condos purchased with cash sell at a discount compared to mortgage-financed condos, which is in line with the cash discount identified in the housing literature. The second component is a TOM-variable cash discount that increases the longer a condo is on the market. In addition, our empirical analysis suggests the cash discount only exists for low-price condos and disappears in higher price segments. In particular, for low-price condos, the cash discount comprises of a 9.42% fixed cash discount and 0.1% per day TOM-variable cash discount. Our results suggest TOM represents an additional explanation for the cash discount in condos and moderates the relation between cash purchase and sales price.

Keywords: Housing market; Condominiums; Cash financing; Time on market (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s11146-022-09913-0

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