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Hot and Cold Seasons in the Housing Market

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  • Ngai, Liwa Rachel
  • Tenreyro, Silvana

Abstract

Every year housing markets in the United Kingdom and the United States experience systematic above-trend increases in both prices and transactions during the second and third quarters (the "hot season") and below-trend falls during the fourth and first quarters (the "cold season"). House price seasonality poses a challenge to existing models of the housing market. To explain seasonal patterns, this paper develops a matching model that emphasizes the role of match-specific quality between the buyer and the house and the presence of thick-market effects in housing markets. It shows that a small, deterministic driver of seasonality can be amplified and revealed as deterministic seasonality in transactions and prices, quantitatively mimicking the seasonal fluctuations in transactions and prices observed in the United Kingdom and the United States.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 9427.

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Date of creation: Apr 2013
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Handle: RePEc:cpr:ceprdp:9427

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Keywords: house price fluctuations; housing market; match quality; search-and-matching; seasonality; thick-market effects;

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References

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Citations

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Cited by:
  1. Susan Vroman & Pieter Gautier & James Albrecht, 2007. "Directed Search in the Housing Market," 2007 Meeting Papers 372, Society for Economic Dynamics.
  2. S. Boragan Aruoba & Morris A. Davis & Randall Wright, 2012. "Homework in Monetary Economics: Inflation, Home Production, and the Production of Homes," NBER Working Papers 18276, National Bureau of Economic Research, Inc.
  3. Selcuk, Cemil, 2010. "Motivated Sellers in the Housing Market," Cardiff Economics Working Papers E2010/2, Cardiff University, Cardiff Business School, Economics Section.
  4. H. Cagri Akkoyun & Yavuz Arslan & Birol Kanik, 2012. "Housing Prices and Transaction Volume," Working Papers 1211, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
  5. Yu Zhu & Randall Wright & Chao He, 2012. "Housing and Liquidity," 2012 Meeting Papers 94, Society for Economic Dynamics.
  6. Selcuk, Cemil, 2012. "Seasonal cycles in the housing market," MPRA Paper 36225, University Library of Munich, Germany.
  7. Antonia Díaz & Belén Jerez, 2010. "House prices, sales, and time on the market : a search-theoretic framework (Supplementary material)," Economics Working Papers we1034, Universidad Carlos III, Departamento de Economía.
  8. Masanori Kashiwagi, . "Sunspots and Self-Fulfilling Beliefs in the U.S. Housing Market," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics.
  9. Alessi, Lucia & Detken, Carsten, 2011. "Quasi real time early warning indicators for costly asset price boom/bust cycles: A role for global liquidity," European Journal of Political Economy, Elsevier, vol. 27(3), pages 520-533, September.
  10. Genesove, David & Han, Lu, 2010. "Search and Matching in the Housing Market," CEPR Discussion Papers 7777, C.E.P.R. Discussion Papers.
  11. Philippe Bracke, 2011. "How Long Do Housing Cycles Last? a Duration Analysis for 19 OECD Countries," IMF Working Papers 11/231, International Monetary Fund.

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