Full Citation

Title: Price and Time to Sale Dynamics in the Housing Market: the Role of Incomplete Information

Citation Type: Miscellaneous

Publication Year: 2012

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Abstract: I propose a stylized model of the house-selling process in which sellers possess incomplete information regarding the state of the housing market. Consistent with the data, the model generates a negative correlation between house prices and time on market. This result is robust to the presence of real estate agents with complete information. I construct a measure of homeowner perceptions of house prices and compare them to market-based house price indices to form a misperceptions index for house prices. An increase in homeowners perceptions relative to actual prices is associated with a decrease in sales volumes, with price misperceptions explaining over one-fifth of the within-state variation in sales volumes from 2000 to 2010.

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Authors: Ehrlich, Gabriel

Publisher: University of Clemenson

Data Collections: IPUMS USA

Topics: Housing and Segregation, Other

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