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Equity and Time to Sale in the Real Estate Market

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  • Genesove, David
  • Mayer, Christopher J

Abstract

Evidence from the Boston condominium market of the early 1990s reveals that an owner's equity position determines his experience as a seller. An owner of a property with a high loan-to-value ratio sets a higher asking price, has a higher expected time on the market and, if he sells, receives a higher price than an owner with proportionately less debt. The down payment requirement for purchasers, but not incumbent owners, provides a simple explanation for this phenomenon among owner-occupants. The results provide supporting evidence for equity-based aggregate theories of price- volume movements in the housing market. Copyright 1997 by American Economic Association.

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  • Genesove, David & Mayer, Christopher J, 1997. "Equity and Time to Sale in the Real Estate Market," American Economic Review, American Economic Association, vol. 87(3), pages 255-269, June.
  • Handle: RePEc:aea:aecrev:v:87:y:1997:i:3:p:255-69
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    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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