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Search strategies on the housing market and their implications on price dispersion

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  • Maury, Tristan-Pierre
  • Tripier, Fabien

Abstract

When an household needs to change its home, two transactions have to be done: buy a new house and sell the preceding one. To do so, the household can either adopt a sequential search strategy or a simultaneous search strategy. In sequential strategies, it first buys (or sells) and only after tries to sell (or buy) to avoid being homeless (or holding two houses). In the simultaneous strategy, the household tries to buy and sell simultaneously on the market. This last strategy can diminish its search costs on the housing market, but exposes the household to the risk of becoming a homeless-renter or a two-houses owner. The literature generally considers only the sequential search strategy. However, we show in this article that the simultaneous strategy is (i) generally welfare improving for households, (ii) sometimes the sole equilibrium strategy, and (iii) at the origin of price dispersion on the housing market.

Suggested Citation

  • Maury, Tristan-Pierre & Tripier, Fabien, 2014. "Search strategies on the housing market and their implications on price dispersion," Journal of Housing Economics, Elsevier, vol. 26(C), pages 55-80.
    • Handle: RePEc:eee:jhouse:v:26:y:2014:i:c:p:55-80
    DOI: 10.1016/j.jhe.2014.09.001
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    Cited by:

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    2. Jianping GU & Yasushi ASAMI, 2016. "Optimal List Price And Duration Of Vacancy In The Housing Market In Tokyo," Review of Urban & Regional Development Studies, Wiley Blackwell, vol. 28(3), pages 182-201, November.
    3. Stefan Seifert & Christoph Kahle & Silke Hüttel, 2021. "Price Dispersion in Farmland Markets: What Is the Role of Asymmetric Information?," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(4), pages 1545-1568, August.
    4. Moen, Espen R. & Nenov, Plamen T., 2014. "Buying First or Selling First in Housing Markets," CEPR Discussion Papers 9946, C.E.P.R. Discussion Papers.
    5. Yu Zhu & Randall Wright & Damien Gaumont, 2017. "Modeling House Prices," 2017 Meeting Papers 744, Society for Economic Dynamics.
    6. Erling Røed Larsen, 2021. "Intra‐Week Price Patterns in the Housing Market," Scandinavian Journal of Economics, Wiley Blackwell, vol. 123(1), pages 327-352, January.

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    More about this item

    Keywords

    Housing; Search; Price dispersion;
    All these keywords.

    JEL classification:

    • R2 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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