Property Delisting, Housing Cycle and Pricing Bias

Abstract

This paper provides a formal analysis on a well-known issue of the housing market observable transaction prices are a biased indication of the true market condition if significant numbers of listed properties are delisted without sale. We provide a closed-form formula to identify and correct such price bias. The model can help market participants and policy makers to form less biased views of the true state of the housing market, especially during the down cycles.

JEL Classification: R2