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To Sell or Not to Sell: List Price, Transaction Price and Marketing Time in the Housing Market

Author

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  • Paul E. Carrillo

    (Department of Economics/Institute for International Economic Policy, George Washington University)

Abstract

This paper specifies and estimates a structural model of home seller behavior. The model is an application of search theory to housing and is estimated using method of moments. The estimation method uncovers an analytical closed-form relationship between reduced- form coefficients of hedonic and marketing time equations and the structural parameters. Estimation can thus be performed using individual level or aggregate data. The model is first estimated using individual housing transaction data from a large suburb of the Washington D.C. metropolitan area during 2006, and it is used to analyze the relationship between list prices and marketing time. Then, for each year in the period 2002-2008, aggregate data are used to compute one structural parameter that measures home sellers bargaining power. Trends of this estimate coincide with popular perceptions about the heat of the housing market in the area.

Suggested Citation

  • Paul E. Carrillo, 2009. "To Sell or Not to Sell: List Price, Transaction Price and Marketing Time in the Housing Market," Working Papers 2010-23, The George Washington University, Institute for International Economic Policy.
    • Handle: RePEc:gwi:wpaper:2010-23
    as

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    References listed on IDEAS

    as
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    5. Merlo, Antonio & Ortalo-Magne, Francois, 2004. "Bargaining over residential real estate: evidence from England," Journal of Urban Economics, Elsevier, vol. 56(2), pages 192-216, September.
    6. Michel Glower & Donald R. Haurin & Patric H. Hendershott, 1998. "Selling Time and Selling Price: The Influence of Seller Motivation," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 26(4), pages 719-740, December.
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    9. Chen, Yongmin & Rosenthal, Robert W, 1996. "Asking Prices as Commitment Devices," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 37(1), pages 129-155, February.
    10. Horowitz, Joel L, 1992. "The Role of the List Price in Housing Markets: Theory and an Econometric Model," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 7(2), pages 115-129, April-Jun.
    11. Springer, Thomas M, 1996. "Single-Family Housing Transactions: Seller Motivations, Price, and Marketing Time," The Journal of Real Estate Finance and Economics, Springer, vol. 13(3), pages 237-254, November.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Real Estate Market; Search Models; Asking Price; Time on the Market; Sellers Market Power; Bargaining Power; Market Heat Index;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • R32 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other Spatial Production and Pricing Analysis

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