Do Large Gains Make Willing Sellers?
40 Pages Posted: 14 Oct 2014 Last revised: 11 Apr 2019
Date Written: April 9, 2019
Using unique real estate data that allow for accurately-measured capital gains, we examine whether sell propensities and selling prices depend on the magnitude of a seller's capital gain. We find that sell propensities are higher and selling prices are lower for properties with a larger gain. Sell propensities also experience a discontinuity at a zero capital gain. Our findings provide empirical support for realization utility (Barberis and Xiong, 2012) but are inconsistent with informed trading and financing constraints.
Keywords: Real Estate, Sell Propensity, Capital Gains, Realization Utility
JEL Classification: G2, G11, R21
Suggested Citation: Suggested Citation