House prices, sales, and time on the market: a search-theoretic framework

Antonia Díaz and Belén Jerez

UC3M Working papers. Economics from Universidad Carlos III de Madrid. Departamento de Economía

Abstract: We build a search model of the housing market which captures the illiquidity of housing assets. In this model, households experience idiosyncratic shocks over time which affect how much they value their residence (e.g. the location of their job could change). When hit by a shock, households become mismatched and seek to buy a new home. Yet they take time to locate an appropriate housing unit and to sell their current home. Competitive forces are present in the housing market since, by posting lower prices, sellers increase the average number of buyer visits they get and sell their property faster. We characterize a stationary equilibrium for a fixed housing stock. We then calibrate a stochastic version of the model to reproduce selected aggregate statistics of the U.S. economy. The model is consistent with the high volatility of prices, sales and average time on the market, the positive correlation of prices and sales, and the negative correlation of prices and average time on the market observed in the data. This is not the case when we consider the perfectly competitive version of the model

Keywords: House; prices; Sales; Time; on; the; market; Search; frictions; Competitive; search (search for similar items in EconPapers)
JEL-codes: D40 D83 R31 (search for similar items in EconPapers)
Date: 2010-10
New Economics Papers: this item is included in nep-bec, nep-dge and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

Downloads: (external link)
https://e-archivo.uc3m.es/rest/api/core/bitstreams ... c1e8a09713ce/content (application/pdf)

Related works:
Journal Article: HOUSE PRICES, SALES, AND TIME ON THE MARKET: A SEARCH‐THEORETIC FRAMEWORK (2013)
Working Paper: House Prices, Sales and Time on the Market: A Search-Theoretic Framework (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cte:werepe:we1033

Access Statistics for this paper

More papers in UC3M Working papers. Economics from Universidad Carlos III de Madrid. Departamento de Economía
Bibliographic data for series maintained by Ana Poveda ().