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Hot and cold seasons in the housing market

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  • L. Rachel Ngai
  • Silvana Tenreyro

Abstract

Every year during the second and thirdquarters (the “hot season”) housing markets in the UK and the US experience systematic above-trend increases in both prices and transactions. During the fourth and first quarters (the “cold season”), house prices and transactions fall below trend. We propose a search-and-matching framework that sheds new light on the mechanisms governing housing market fluctuations. The model has a “thick-market” effect that can generate substantial differences in the volume of transactions and prices across seasons, with the extent of seasonality in prices depending crucially on the bargaining power of sellers. The model can quantitatively mimic the seasonal fluctuations in transactions and prices observed in the UK and the US.

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File URL: http://eprints.lse.ac.uk/25497/
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Bibliographic Info

Paper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 25497.

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Length: 57 pages
Date of creation: Apr 2009
Date of revision:
Handle: RePEc:ehl:lserod:25497

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References

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Citations

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Cited by:
  1. Arslan, Yavuz & Akkoyun, H. Cagri & Kanik, Birol, 2011. "Housing prices and transaction volume," MPRA Paper 37343, University Library of Munich, Germany, revised 01 Mar 2012.
  2. James Albrecht & Pieter A. Gautier & Susan Vroman, 2010. "Directed Search in the Housing Market," Tinbergen Institute Discussion Papers 10-005/3, Tinbergen Institute.
  3. Philippe Bracke, 2011. "How Long Do Housing Cycles Last? a Duration Analysis for 19 OECD Countries," IMF Working Papers 11/231, International Monetary Fund.
  4. Yu Zhu & Randall Wright & Chao He, 2013. "Housing and Liquidity," 2013 Meeting Papers 168, Society for Economic Dynamics.
  5. Selcuk, Cemil, 2012. "Seasonal Cycles in the Housing Market," Cardiff Economics Working Papers E2012/1, Cardiff University, Cardiff Business School, Economics Section.
  6. Masanori Kashiwagi, . "Sunspots and Self-Fulfilling Beliefs in the U.S. Housing Market," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics.
  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. 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.
  9. 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.
  10. Genesove, David & Han, Lu, 2012. "Search and matching in the housing market," Journal of Urban Economics, Elsevier, vol. 72(1), pages 31-45.
  11. Selcuk, Cemil, 2010. "Motivated Sellers in the Housing Market," Cardiff Economics Working Papers E2010/2, Cardiff University, Cardiff Business School, Economics Section.

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