NAR Settlement, House Prices, and Consumer Welfare

Greg Buchak, Gregor Matvos, Tomasz Piskorski and Amit Seru

No 32855, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Motivated by the recent National Association of Realtors (NAR) settlement, we examine how reduced real estate agent commissions affect home prices, housing turnover, and consumer welfare. Using a calibrated dynamic structural search model, we show that by reducing future transaction costs, lower commissions raise the value of housing as a durable asset and tend to increase house prices. While reduced fees generally improve consumer welfare, most gains accrue to current homeowners, with limited benefits for prospective buyers. Higher prices may also crowd out financially constrained households, suggesting that lower agent fees are unlikely to significantly improve housing affordability and access. Our findings underscore the importance of accounting for market dynamics, consumer heterogeneity, and general equilibrium effects. They also shed light on the redistributive implications of technological innovations—such as those leveraging AI—that reduce transaction costs. Finally, our analysis suggests that static IO-style models may be ill-suited to studying transaction costs in durable goods markets, where dynamic considerations and repeated resale are central, as this can lead to misestimated magnitudes and even incorrect signs of key effects.

JEL-codes: G0 G2 G50 L0 R20 (search for similar items in EconPapers)
Date: 2024-08
New Economics Papers: this item is included in nep-com and nep-ure
Note: CF PE
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.nber.org/papers/w32855.pdf (application/pdf)
Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.

Related works:
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:nbr:nberwo:32855

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w32855
The price is Paper copy available by mail.

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().