Buying First or Selling First in Housing Markets

Espen Moen (), Plamen T. Nenov and Florian Sniekers

No 10342, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Housing transactions by owner-occupiers take two steps, purchase of a new property and sale of the old housing unit. This paper shows how the transaction sequence decision of owner-occupiers depends on, and in turn, affects housing market conditions in an equilibrium search-and-matching model of the housing market. We show that home-owners prefer to buy first whenever there are more buyers than sellers in the market. This behavior leads to multiple steady state equilibria and to self-fulfilling fluctuations in prices and time-on-market. Equilibrium switches creates large fluctuations in the housing market, which are broadly consistent with stylized facts on the housing cycle.

Keywords: Housing market; Search frictions; Order of transactions; Strategic complementarities (search for similar items in EconPapers)
JEL-codes: R21 R31 (search for similar items in EconPapers)
Date: 2015-01
New Economics Papers: this item is included in nep-dge and nep-ure
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Citations: View citations in EconPapers (11)

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Related works:
Journal Article: Buying First or Selling First in Housing Markets (2021)
Working Paper: Buying first or selling first in housing markets (2021)
Working Paper: Buying First or Selling First in Housing Markets (2014)
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