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Moving House

Author

Listed:
  • Ngai, Liwa Rachel
  • Sheedy, Kevin D.

Abstract

Using data on house sales and inventories of unsold houses, this paper shows that changes in sales volume are largely explained by changes in the frequency at which houses are put up for sale rather than changes in the length of time taken to sell them. Thus the decision to move house is key to understanding the volume of sales. This paper builds a model where homeowners chose when to move house, which can be seen as an investment in housing match quality. Since moving house is an investment with upfront costs and potentially long-lasting benefits, the model predicts that the aggregate moving rate depends on macroeconomic variables such as interest rates. The endogeneity of moving also means that those who move come from the bottom of the existing match quality distribution, which gives rise to a cleansing effect and leads to overshooting of housing-market variables.

Suggested Citation

  • Ngai, Liwa Rachel & Sheedy, Kevin D., 2015. "Moving House," CEPR Discussion Papers 10346, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:10346
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    Cited by:

    1. Glaeser, Edward L. & Nathanson, Charles G., 2017. "An extrapolative model of house price dynamics," Journal of Financial Economics, Elsevier, vol. 126(1), pages 147-170.
    2. Hongfei Sun & Chenggang Zhou & Allen Head, 2016. "Default, Mortgage Standards, and Housing Liquidity," 2016 Meeting Papers 625, Society for Economic Dynamics.

    More about this item

    Keywords

    endogenous moving; housing market; match quality investment; search and matching;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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