Equity and Time to Sale in the Real Estate Market

David Genesove and Christopher Mayer

No 4861, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Recent research has proposed a pro-cyclical link between sales volume and prices in the real estate market through changes in the equity of existing homeowners. This article uses data from the Boston condominium market to show that owners with high loan-to-value ratios take longer to sell their properties than owners with low loan-to- value ratios. Properties with high loan-to-value ratios are listed at higher asking prices; when sold, they receive higher prices than units with less debt. Together, these results are consistent with a search model in which owners 'constrained' by large amounts of debt set a higher reservation price than 'unconstrained' owners, accepting a lower probability of sale in exchange for a higher final sales price.

JEL-codes: L13 (search for similar items in EconPapers)
Date: 1994-09
Note: IO
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Published as American Economic Review, june 1997.

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Related works:
Journal Article: Equity and Time to Sale in the Real Estate Market (1997)
Working Paper: Equity and Time to Sale in the Real Estate Market (1994)
Working Paper: Equity and time to sale in the real estate market (1993)
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