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A search-theoretic model of the rental and homeownership markets

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  • Kashiwagi, Masanori

Abstract

This paper presents a simple model of the rental and homeownership markets in a unified framework. The paper then investigates the model’s positive and normative properties, applying ideas developed in search and matching theory. I analytically address the comparative static and welfare implications of the model. In addition, as an extension toward realism, I consider a version of the model with free entry of housing supply, while the benchmark model assumes exogenous housing supply. To examine the benchmark model’s dynamics, I generate the impulse responses of house prices, rents, and housing occupancy patterns to an increase in housing supply and show that house prices react more than rents in the short run.

Suggested Citation

  • Kashiwagi, Masanori, 2014. "A search-theoretic model of the rental and homeownership markets," Journal of Housing Economics, Elsevier, vol. 26(C), pages 33-47.
  • Handle: RePEc:eee:jhouse:v:26:y:2014:i:c:p:33-47
    DOI: 10.1016/j.jhe.2014.07.001
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    Citations

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    Cited by:

    1. Miroslav Gabrovski & Victor Ortego-Marti, 2018. "Housing Market Dynamics with Search Frictions," Working Papers 201804, University of California at Riverside, Department of Economics.
    2. Daisy J. Huang & Charles Ka Yui Leung & Chung-Yi Tse, 2018. "What Accounts for the Differences in Rent-Price Ratio and Turnover Rate? A Search-and-Matching Approach," The Journal of Real Estate Finance and Economics, Springer, vol. 57(3), pages 431-475, October.
    3. repec:eee:jetheo:v:181:y:2019:i:c:p:361-381 is not listed on IDEAS
    4. repec:eee:jhouse:v:38:y:2017:i:c:p:14-24 is not listed on IDEAS
    5. Gabrovski, Miroslav & Ortego-Marti, Victor, 2019. "The cyclical behavior of the Beveridge Curve in the housing market," Journal of Economic Theory, Elsevier, vol. 181(C), pages 361-381.
    6. Miroslav Gabrovski & Victor Ortego-Marti, 2018. "Search and Credit Frictions in the Housing Market," Working Papers 201811, University of Hawaii at Manoa, Department of Economics.
    7. Erlend Eide Bø, 2019. "Buy to let. Investment buyers in a housing search model," Discussion Papers 896, Statistics Norway, Research Department.
    8. Mark Merante & Keren Mertens Horn, 2016. "Is Home Sharing Driving up Rents? Evidence from Airbnb in Boston," Working Papers 2016_03, University of Massachusetts Boston, Economics Department.

    More about this item

    Keywords

    House prices; Rents; Search and matching;

    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General
    • R32 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other Spatial Production and Pricing Analysis

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