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A Matching Model of the Housing Market: Searching for a Motivated Partner

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  • James Albrecht
  • Axel Anderson

Abstract

We construct a bilateral search model of the housing market in which agents differ in their flow rewards while searching. Buyers and sellers enter the market with high flow rewards, but move at a Poisson rate to a state with low flow rewards if they do not transact in the meantime. We characterize the equilibrium steady state matching pattern and compare this to the constrained efficient matching pattern. We also characterize the joint distribution of price and time to sale (for sellers). The expected price conditional on time to sale falls with time spent on the market, while the conditional variance of price first rises and then falls with time on the market

Suggested Citation

  • James Albrecht & Axel Anderson, 2004. "A Matching Model of the Housing Market: Searching for a Motivated Partner," 2004 Meeting Papers 376, Society for Economic Dynamics.
    • Handle: RePEc:red:sed004:376
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    References listed on IDEAS

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    1. Gerard J. van den Berg, 1990. "Nonstationarity in Job Search Theory," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 57(2), pages 255-277.
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    5. Merlo, Antonio & Ortalo-Magne, Francois, 2004. "Bargaining over residential real estate: evidence from England," Journal of Urban Economics, Elsevier, vol. 56(2), pages 192-216, September.
    6. Wheaton, William C, 1990. "Vacancy, Search, and Prices in a Housing Market Matching Model," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1270-1292, December.
    7. Michel Glower & Donald R. Haurin & Patric H. Hendershott, 1998. "Selling Time and Selling Price: The Influence of Seller Motivation," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 26(4), pages 719-740, December.
    8. Kenneth Burdett & Tara Vishwanath, 1988. "Declining Reservation Wages and Learning," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 55(4), pages 655-665.
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    More about this item

    Keywords

    matching; search; housing;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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