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Rental housing market and directed search

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  • Julien Pascal

Abstract

This paper introduces new empirical findings concerning the rental housing market in the Paris metropolitan area. Combining a new dataset gathered from online advertisements for Parisian rentals with a hedonic model that incorporates both apartment features and property-specific photographs, two main stylized facts are established. First, with comparable property features, landlords who ask for lower rent attract a greater number of applicants, consistent with predictions from standard directed search models. Second, many landlords employ a two-stage pricing approach, initially advertising a high rent and then reducing it after a "wait-and-see" period. This previously unreported feature is consistent with the slow Dutch auction mechanism studied in the auction literature and observed in the property sales market.

Suggested Citation

  • Julien Pascal, 2023. "Rental housing market and directed search," BCL working papers 179, Central Bank of Luxembourg.
    • Handle: RePEc:bcl:bclwop:bclwp179
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    File URL: https://www.bcl.lu/en/publications/Working-papers/179/BCLWP179.pdf
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    More about this item

    Keywords

    Rental Housing Market; Hedonic Model; Directed Search Models; Landlords’Pricing Strategies; Machine Learning;
    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
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • C45 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Neural Networks and Related Topics

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