Transaction Sequencing and House Price Pressures

Espen Moen (), Morten Grindaker, Artashes Karapetyan and Plamen T. Nenov

No 16351, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We use a unique data set of individual transaction histories from Norway to show that temporary shocks to the buyer-to-seller ratio (or market tightness) caused by the transaction sequence decisions of moving homeowners -- whether to buy first and then sell or vice versa -- impact house prices. Using a shift-share IV design motivated by a simple theoretical model, we estimate that a 10 percentage point increase in the aggregate buy-first share causes house prices to increase by around 5 percent, time-to-sell to decrease by around 17 percent, and market tightness to increase by around 15 percent more in a local housing market that has a one standard deviation higher share of locally moving owners. Our empirical strategy allows us to estimate an elasticity of price to market tightness of around 0.4 and an elasticity of matching with respect to buyers of around 0.86.

Keywords: Housing markets; Trading frictions; Market tightness; Transaction order; Shift-share design; Transaction-level data; Transaction histories; Search theory (search for similar items in EconPapers)
Date: 2021-07
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