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Property delisting, housing cycle and pricing bias

  • Cheng, Ping
  • Lin, Zhenguo
  • Liu, Yingchun
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    This paper provides a formal analysis on a well-known issue of the housing market - observable transaction prices are a biased indication of the true market condition if significant numbers of listed properties are delisted without sale. We provide a closed-form formula to identify and correct such pricing bias. The model can help market participants and policy makers to form less biased views of the true state of the housing market, especially during the down cycles.

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    File URL: http://www.sciencedirect.com/science/article/pii/S1051137711000039
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    Article provided by Elsevier in its journal Journal of Housing Economics.

    Volume (Year): 20 (2011)
    Issue (Month): 2 (June)
    Pages: 152-157

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    Handle: RePEc:eee:jhouse:v:20:y:2011:i:2:p:152-157
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622881

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    1. Thomas J. Miceli, 1989. "The Optimal Duration of Real Estate Listing Contracts," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 17(3), pages 267-277.
    2. Quan, Daniel C & Quigley, John M, 1991. "Price Formation and the Appraisal Function in Real Estate Markets," The Journal of Real Estate Finance and Economics, Springer, vol. 4(2), pages 127-46, June.
    3. Abdullah Yavaş, 1992. "A Simple Search and Bargaining Model of Real Estate Markets," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 20(4), pages 533-548.
    4. Whipple, David, 1973. "A Generalized Theory of Job Search," Journal of Political Economy, University of Chicago Press, vol. 81(5), pages 1170-88, Sept.-Oct.
    5. Michael A. Arnold, 1999. "Search, Bargaining and Optimal Asking Prices," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 27(3), pages 453-481.
    6. Shaun Bond & Soosung Hwang & Zhenguo Lin & Kerry Vandell, 2007. "Marketing Period Risk in a Portfolio Context: Theory and Empirical Estimates from the UK Commercial Real Estate Market," The Journal of Real Estate Finance and Economics, Springer, vol. 34(4), pages 447-461, May.
    7. Yinger, John, 1981. "A Search Model of Real Estate Broker Behavior," American Economic Review, American Economic Association, vol. 71(4), pages 591-605, September.
    8. Zhenguo Lin & Kerry D. Vandell, 2007. "Illiquidity and Pricing Biases in the Real Estate Market," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 35(3), pages 291-330, 09.
    9. Zhenguo Lin & Yingchun Liu, 2008. "Real Estate Returns and Risk with Heterogeneous Investors," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 36(4), pages 753-776, December.
    10. Ping Cheng & Zhenguo Lin & Yingchun Liu, 2008. "A Model of Time-on-Market and Real Estate Price Under Sequential Search with Recall," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 36(4), pages 813-843, December.
    11. Barron, John M, 1975. "Search in the Labor Market and the Duration of Unemployment: Some Empirical Evidence," American Economic Review, American Economic Association, vol. 65(5), pages 934-42, December.
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