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High and Low Activity Spells in Housing Markets

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  • Eric Smith

    (University of Essex)

Abstract

This paper demonstrates the way in which stock-flow matching with endogenous seller entry generates hot and cold spells in house sales. Potential sellers know the number of bidders remaining from the last house sale. If two or more bidders remain, the seller obtains the gains to trade through competitive bidding. The market is active. With one monopolistic bidder, the buyer captures the surplus and sellers become unwilling to enter. The market remains inactive until sellers think enough time has passed for buyer entry to have replenished the market and make entry profitable. The resulting pattern of trade matches up with observations from Dane County, Wisconsin. (Copyright: Elsevier)

Suggested Citation

  • Eric Smith, 2020. "High and Low Activity Spells in Housing Markets," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 36, pages 1-28, April.
  • Handle: RePEc:red:issued:18-249
    DOI: 10.1016/j.red.2019.07.004
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    File URL: http://dx.doi.org/10.1016/j.red.2019.07.004
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    References listed on IDEAS

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    Cited by:

    1. 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.

    More about this item

    Keywords

    Stock-flow matching; Sales fluctuations; Price fluctuations; Time on the market;

    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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