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A Disequilibrium Model of the Housing Market: Implicit Selling Time as a Signal of Optimal Holding Periods and Buyer Valuation

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  • Eric Levin
  • Gwilym Pryce

Abstract

We develop a theoretical model of house market disequilibrium. Price and quantity adjustments occur as the consequence of inventory adjustment in the absence of a market maker. This approach reveals a process of dynamic adjustment whereby sellers alter their reservation prices in response to implicit time on the market as a signal of excess demand. Unobservable equilibrium house prices are estimated using time on the market and house price data for Glasgow between 1999 and 2007. Empirical estimation models sellersí reservation price response to the overhang of unsold houses and the excess demand curve within an econometric framework.

Suggested Citation

  • Eric Levin & Gwilym Pryce, 2009. "A Disequilibrium Model of the Housing Market: Implicit Selling Time as a Signal of Optimal Holding Periods and Buyer Valuation," ERES eres2009_309, European Real Estate Society (ERES).
    • Handle: RePEc:arz:wpaper:eres2009_309
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    File URL: https://eres.architexturez.net/doc/oai-eres-id-eres2009-309
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    Cited by:

    1. Shao-Chi Fang & Wen-Chih Yeh & Chun-Chang Lee & Zheng Yu, 2021. "Factors Affecting the Price of Cost-Equivalent Land: Application of Hierarchical Linear Modeling," Land, MDPI, vol. 10(7), pages 1-23, June.

    More about this item

    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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