Opportunistic Matching in the Housing Market

24 Pages Posted: 11 Apr 2007

See all articles by James Albrecht

James Albrecht

Georgetown University - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute); IZA Institute of Labor Economics

Axel Anderson

Georgetown University - Department of Economics

Eric Smith

University of Essex - Department of Economics

Susan Vroman

Georgetown University; IZA Institute of Labor Economics

Abstract

We construct a model of the housing market in which agents differ in their flow values while searching. Agents enter the market relaxed (with high flow values) but move to a desperate state (low flow values) at a Poisson rate if they have not already transacted. We characterize the equilibrium steady-state matching pattern and 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, whereas the conditional variance of price first rises and then falls with time on the market.

Suggested Citation

Albrecht, James W. and Anderson, Axel and Smith, Eric and Vroman, Susan B., Opportunistic Matching in the Housing Market. International Economic Review, Vol. 48, No. 2, pp. 641-664, May 2007. Available at SSRN: https://ssrn.com/abstract=979639 or http://dx.doi.org/10.1111/j.1468-2354.2007.00440.x

James W. Albrecht (Contact Author)

Georgetown University - Department of Economics ( email )

Washington, DC 20057
United States
202-687-6105 (Phone)
202-687-6102 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Axel Anderson

Georgetown University - Department of Economics ( email )

Washington, DC 20057
United States

Eric Smith

University of Essex - Department of Economics ( email )

Wivenhoe Park
Colchester CO4 3SQ
United Kingdom

Susan B. Vroman

Georgetown University ( email )

Washington, DC 20057
United States
202-687-6024 (Phone)
202-687-6102 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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