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Measuring the Cost of Imperfect Information in the Tokyo Housing Market

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  • Chihiro Shimizu

    (RECRUIT Real Estate Research Institute)

  • Kiyohiko G. Nishimura

    (Faculty of Economics, University of Tokyo)

  • Yasushi Asami

    (Center for Spatial Information Science, University of Tokyo)

Abstract

The cost of imperfect information is estimated in the real estate market of resale condominiums in central Tokyo by using a new, comprehensive data set of resale condominium transactions. The results suggest a substantial cost. Specifically, if information were perfectly available and marketing time is null, sellers would get benefits of 10.58% based on average interest rate, 31.28% on gross rent and 22.59% on net rent, against imputed rent of their property. Buyers spend 1,042,000 Yen on search activities for one transaction, which would be saved if information were prefect. This cost amounts to be equivalent to 13.2% of buyers' average annual income.

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File URL: http://www.cirje.e.u-tokyo.ac.jp/research/dp/2003/2003cf238.pdf
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Paper provided by CIRJE, Faculty of Economics, University of Tokyo in its series CIRJE F-Series with number CIRJE-F-238.

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Length: 35 pages
Date of creation: Aug 2003
Date of revision:
Handle: RePEc:tky:fseres:2003cf238

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  1. W. Douglass Shaw, 1992. "Searching for the Opportunity Cost of an Individual's Time," Land Economics, University of Wisconsin Press, vol. 68(1), pages 107-115.
  2. Donald Haurin, 1988. "The Duration of Marketing Time of Residential Housing," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 16(4), pages 396-410.
  3. Richard Arnott, 1988. "Housing Vacancies, Thin Markets, and Idiosyncratic Tastes," Working Papers 722, Queen's University, Department of Economics.
  4. John Krainer, 1999. "Real estate liquidity," Economic Review, Federal Reserve Bank of San Francisco, pages 14-26.
  5. Van der Vlist, Arno J & Rietveld, Piet & Nijkamp, Peter, 2002. "Residential Search and Mobility in a Housing Market Equilibrium Model," The Journal of Real Estate Finance and Economics, Springer, vol. 24(3), pages 277-99, May.
  6. Wheaton, William C, 1990. "Vacancy, Search, and Prices in a Housing Market Matching Model," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1270-92, December.
  7. Edward A. Baryla & Leonard V. Zumpano, 1995. "Buyer Search Duration in the Residential Real Estate Market: The Role of the Real Estate Agent," Journal of Real Estate Research, American Real Estate Society, vol. 10(1), pages 1-14.
  8. Kiyohiko G. Nishimura, 1999. "Expectations Heterogeneity and Excessive Price Sensitivity in the Land Market," The Japanese Economic Review, Japanese Economic Association, vol. 50(1), pages 26-43, 03.
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