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Are homes hot or cold potatoes? The distribution of marketing time in the housing market

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  • Carrillo, Paul E.
  • Pope, Jaren C.

Abstract

This paper analyzes how the distribution of marketing time of residential real estate evolves across time. Using real estate data from a large suburb in the Washington D.C. area we first show that the whole distribution of marketing time shifts to the right when a “hot” housing market in 2003 is compared with a “cold” one in 2007. The shift, however, is not homogenous across the distribution: it is negligible at lower percentiles, very large at the median and much smaller at higher percentiles. Moreover, the shift in the distribution cannot be explained by changes in the characteristics of the units. We then compute (quality adjusted) time on the market distributions and hazard functions for each year during the period 1997 to 2007. We find that while there are no changes at the bottom of the (conditional) distribution over time, higher percentiles, such as the first quartile and the median, are notably more volatile. We also find that the distribution of marketing time is heterogeneous across property types and property location. The focus on the distribution of marketing time rather than solely on the mean or on the median provides a comprehensive description of the evolution of this asset's liquidity and may help homeowners and financial institutions to better grapple with liquidity risk.

Suggested Citation

  • Carrillo, Paul E. & Pope, Jaren C., 2012. "Are homes hot or cold potatoes? The distribution of marketing time in the housing market," Regional Science and Urban Economics, Elsevier, vol. 42(1-2), pages 189-197.
  • Handle: RePEc:eee:regeco:v:42:y:2012:i:1:p:189-197
    DOI: 10.1016/j.regsciurbeco.2011.08.010
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Agnes Kovacs, 2016. "Present Bias, Temptation and Commitment Over the Life-Cycle: Estimating and Simulating Gul-Pesendorfer Preferences," Economics Series Working Papers 796, University of Oxford, Department of Economics.
    2. Erik Robert de Carrillo & William Larson, 2012. "Can housing liquidity help forecast subsequent house price appreciation: Evidence from the US and the Netherlands," ERES eres2012_174, European Real Estate Society (ERES).
    3. Peyman Khezr & Flavio M. Menezes, 2016. "Dynamic and Static Asking Prices in the Sydney Housing Market," The Economic Record, The Economic Society of Australia, vol. 92(297), pages 209-221, June.
    4. Paul E. Carrillo & Erik Robert De Wit & William D. Larson, 2012. "Can Tightness in the Housing Market Help Predict Subsequent Home Price Appreciation? Evidence from the U.S. and the Netherlands," Working Papers 2012-11, The George Washington University, Institute for International Economic Policy.
    5. repec:eee:regeco:v:69:y:2018:i:c:p:11-24 is not listed on IDEAS
    6. Paul E. Carrillo & Benjamin Williams, 2015. "The Repeat Time-On-The-Market Index," Working Papers 2015-8, The George Washington University, Institute for International Economic Policy.
    7. Paul E. Carrillo & Jonathan Rothbaum, 2014. "Counterfactual Spatial Distributions," Working Papers 2014-05, The George Washington University, Institute for International Economic Policy.
    8. Carolin Fritzsche & Lars Vandrei, 2018. "Causes of Vacancies in the Housing Market – A Literature Review," ifo Working Paper Series 258, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    9. Patrick S. Smith & Karen M. Gibler & Velma Zahirovic-Herbert, 2016. "The Effect of Relisting on House Selling Price," The Journal of Real Estate Finance and Economics, Springer, vol. 52(2), pages 176-195, February.
    10. Liu, Crocker H. & Nowak, Adam & Rosenthal, Stuart S., 2016. "Housing price bubbles, new supply, and within-city dynamics," Journal of Urban Economics, Elsevier, vol. 96(C), pages 55-72.
    11. Pan, Yao, 2016. "Understanding the rural and urban household saving rise in China," Regional Science and Urban Economics, Elsevier, vol. 56(C), pages 46-59.

    More about this item

    Keywords

    Time on market; Liquidity risk; Quantile decomposition; Duration model; Censoring;

    JEL classification:

    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies

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