Heterogeneous Real Estate Agents and the Housing Cycle
Sonia Gilbukh and
No 2020-002, Working Papers from Human Capital and Economic Opportunity Working Group
The real estate market is highly intermediated, with 90 percent of buyers and sellers hiring an agent to help them transact a house. However, low barriers to entry and fixed commission rates result in a market where inexperienced intermediaries have a large market share, especially following house price booms. Using rich micro-level data on 10.4 million listings, we first show that houses listed for sale by inexperienced real estate agents have a lower probability of selling, and this effect is strongest during the housing bust. We then study the aggregate implications of the distribution of agents’ experience on housing market liquidity by building a dynamic entry and exit model of real estate agents with aggregate shocks. Several policies that raise the barriers to entry for agents are considered: 1) lower commission rates, 2) increased entry costs, and 3) more informed clients. Relative to the baseline, all three policies lead to an increase in average liquidity, with the largest effect during the bust.
Keywords: intermediaries; housing prices; real-estate cycles (search for similar items in EconPapers)
JEL-codes: R21 D40 R32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge and nep-ure
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http://humcap.uchicago.edu/RePEc/hka/wpaper/Gilbuk ... al-estate-agents.pdf First version, October 30, 2019 (application/pdf)
Working Paper: Heterogeneous Real Estate Agents and the Housing Cycle (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:hka:wpaper:2020-002
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