Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/65741
Authors: 
Selcuk, Cemil
Year of Publication: 
2010
Series/Report no.: 
Cardiff Economics Working Papers E2010/2
Abstract: 
We present a search-and-matching model of the housing market where potential buyers' willingness to pay is private information and sellers may become desperate as they are unable to sell. A unique steady state equilibrium exists where desperate sellers offer sizeable price cuts and sell faster. If the number of distressed sales rises then even relaxed sellers are forced to lower their prices. Buyers, on the other hand, become more selective and search longer for better deals. The model yields a theoretical density function of the time-to-sale, which is positively skewed and may be hump-shaped. These results are consistent with recent empirical findings.
Subjects: 
housing
private information
random search
motivated sellers
JEL: 
D39
D49
D83
Document Type: 
Working Paper

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