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Days on market and home sales

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  • Catherine Tucker
  • Juanjuan Zhang
  • Ting Zhu

Abstract

In April 2006, the real estate listing service in Massachusetts adopted a new policy that prohibits home sellers from resetting their property’s “days on market” to zero through relisting. We study the effect of this new policy on single-family home sales along the Massachusetts-Rhode Island border, using homes in Rhode Island, which did not change its policy, as the control group. We find that the policy change leads to a relative sale price reduction of around $11,000 for affected homes in Massachusetts. Homes caught in the middle of the policy change are the hardest hit; the sudden release of the cumulative days on market information lowers the average sale price by $21,500. Sellers respond to the new policy by reducing the listing price to shorten their property’s days on market.
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  • Catherine Tucker & Juanjuan Zhang & Ting Zhu, 2013. "Days on market and home sales," RAND Journal of Economics, RAND Corporation, vol. 44(2), pages 337-360, June.
    • Handle: RePEc:bla:randje:v:44:y:2013:i:2:p:337-360
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    File URL: http://hdl.handle.net/10.1111/rand.2013.44.issue-2
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    2. Palazzo, Francesco, 2017. "Search costs and the severity of adverse selection," Research in Economics, Elsevier, vol. 71(1), pages 171-197.
    3. Tong Guo & Srinivasaraghavan Sriram & Puneet Manchanda, 2020. "“Let the Sunshine In”: The Impact of Industry Payment Disclosure on Physician Prescription Behavior," Marketing Science, INFORMS, vol. 39(3), pages 516-539, May.
    4. Justin T. Kistler & Ramkumar Janakiraman & Subodha Kumar & Vikram Tiwari, 2021. "The Effect of Operational Process Changes on Preoperative Patient Flow: Evidence from Field Research," Production and Operations Management, Production and Operations Management Society, vol. 30(6), pages 1647-1667, June.
    5. Vrinda Kadiyali & Jeffrey Prince & Daniel Simon, 2014. "Is Dual Agency in Real Estate a Cause for Concern?," The Journal of Real Estate Finance and Economics, Springer, vol. 48(1), pages 164-195, January.
    6. Bruce L. Gordon & Daniel T. Winkler, 2017. "The Effect of Listing Price Changes on the Selling Price of Single-Family Residential Homes," The Journal of Real Estate Finance and Economics, Springer, vol. 55(2), pages 185-215, August.
    7. Nathan Yang, 2011. "An Empirical Model of Industry Dynamics with Common Uncertainty and Learning from the Actions of Competitors," Working Papers 11-16, NET Institute.
    8. Michaletz Vladimir B. & Artemenkov Andrey, 2018. "A Demand - and Supply- Side Constrained Model for Liquidation Value and Related Exposure Periods," Real Estate Management and Valuation, Sciendo, vol. 26(2), pages 48-59, June.
    9. Liang, Cong & Hui, Eddie C.M. & Yip, Tsz Leung, 2018. "Time on market (TOM): The impact of new residential stamp duty," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 503(C), pages 1117-1130.
    10. Tommaso Bondi, 2019. "Alone, Together. Product Discovery Through Consumer Ratings," Working Papers 19-09, NET Institute.
    11. Sushil Bikhchandani & David Hirshleifer & Omer Tamuz & Ivo Welch, 2021. "Information Cascades and Social Learning," Papers 2105.11044, arXiv.org.
    12. Eerola, Essi & Lyytikäinen, Teemu, 2015. "On the role of public price information in housing markets," Regional Science and Urban Economics, Elsevier, vol. 53(C), pages 74-84.
    13. Ni Huang & Tianshu Sun & Peiyu Chen & Joseph M. Golden, 2019. "Word-of-Mouth System Implementation and Customer Conversion: A Randomized Field Experiment," Information Systems Research, INFORMS, vol. 30(3), pages 805-818, September.
    14. Martel, Jordan, 2018. "Quality, price, and time-on-market," Economics Letters, Elsevier, vol. 171(C), pages 97-101.
    15. Aydin, Erdal & Correa, Santiago Bohórquez & Brounen, Dirk, 2019. "Energy performance certification and time on the market," Journal of Environmental Economics and Management, Elsevier, vol. 98(C).

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    More about this item

    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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