Bidding Wars for Houses

32 Pages Posted: 18 Feb 2014

See all articles by Lu Han

Lu Han

University of Toronto - Rotman School of Management

William C. Strange

University of Toronto - Rotman School of Management

Multiple version iconThere are 2 versions of this paper

Date Written: Spring 2014

Abstract

This article analyzes the time series and cross‐sectional patterns of bidding wars for houses. Bidding wars were once rare, a fairly constant 3–4% of transactions. This led to treating list price as a ceiling in empirical and theoretical research on housing. The bidding war share roughly tripled between 1995 and 2005, rising to more than 30% in some markets. The share fell during the subsequent bust, but it remains approximately twice as high as previously. The article shows bidding war incidence to be greater during macroeconomic and housing booms. The article also considers other potential contributing factors, including buyer irrationality, the use of the Internet in home purchases and land use regulation.

Suggested Citation

Han, Lu and Strange, William C., Bidding Wars for Houses (Spring 2014). Real Estate Economics, Vol. 42, Issue 1, pp. 1-32, 2014. Available at SSRN: https://ssrn.com/abstract=2397511 or http://dx.doi.org/10.1111/reec.12015

Lu Han (Contact Author)

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

William C. Strange

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

HOME PAGE: http://www.rotman.utoronto.ca/%7Ewstrange/

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