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The Impact of TOM on Prices in the US Housing Market

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  • Darren K. Hayunga

    (University of Georgia)

  • R. Kelley Pace

    (Louisiana State University)

Abstract

Search theory shows that real property prices and marketing durations are simultaneously determined and positively related. Yet, empirical studies find positive, negative, and insignificant parameter estimates on the time-on-the-market (TOM) variable in price models. Using a dataset well suited to the research question, this article investigates reasons for the divergence between the theoretical and empirical results. Our test equations examine the quality of instrumental variables, severe overpricing, atypicality, structure quality, loss aversion, market tightness as well as measures unique to our data such as sellers’ income levels, reasons for sale, and urgency. We find that weak instrumental variables account for the varied empirical relations between transaction prices and TOM.

Suggested Citation

  • Darren K. Hayunga & R. Kelley Pace, 2019. "The Impact of TOM on Prices in the US Housing Market," The Journal of Real Estate Finance and Economics, Springer, vol. 58(3), pages 335-365, April.
    • Handle: RePEc:kap:jrefec:v:58:y:2019:i:3:d:10.1007_s11146-018-9657-0
    DOI: 10.1007/s11146-018-9657-0
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    References listed on IDEAS

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    1. Irwin, Nicholas & Wolf, David, 2022. "Time is money: Water quality's impact on home liquidity and property values," Ecological Economics, Elsevier, vol. 199(C).

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    More about this item

    Keywords

    Time on the market; Instrumental variables; Omitted variables; Simultaneity; Urgency; Income; Reasons for sale;
    All these keywords.

    JEL classification:

    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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