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Pricing and incentives in the housing market

Author

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  • Anundsen, André K.
  • Nenov, Plamen
  • Røed Larsen, Erling
  • Sommervoll, Dag Einar

Abstract

We study the housing market effects of a mark-down in the listing of a unit. We define a mark-down as an ask price below a publicly observed estimate of a housing unit’s market value. Using a unique bid-log dataset as well as transaction-level data, we demonstrate that, empirically, a mark-down implies more bidders, but lower opening bids. The net effect is a lower spread between the sell price and the estimated market value. Therefore, our empirical findings point to a relatively important direct effect of ask price changes on the expected sell price and a more limited role of the indirect effect arising from ask price changes directing the flow of buyers. We argue that our empirical findings are consistent with a simple directed search model of ask price determination in the presence of a conflict of interest between the seller and real estate agent over how to trade-off a higher sell price against a longer time-on-market.

Suggested Citation

  • Anundsen, André K. & Nenov, Plamen & Røed Larsen, Erling & Sommervoll, Dag Einar, 2026. "Pricing and incentives in the housing market," European Economic Review, Elsevier, vol. 183(C).
    • Handle: RePEc:eee:eecrev:v:183:y:2026:i:c:s0014292125002636
    DOI: 10.1016/j.euroecorev.2025.105213
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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