Home Price, Time-on-Market, and Seller Heterogeneity Under Changing Market Conditions

Cheng, Ping; Lin, Zhenguo; Liu, Yingchun

doi:10.1007/s11146-009-9167-1

Cited by 14 publications

(20 citation statements)

References 32 publications

(51 reference statements)

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“…4 Of course, the investors can always choose to sell the real estate immediately or quickly. However, the would-be return from the immediate sale is expected to be much lower, see Lin and Vandell (2007), Cheng et al (2008), Lin and Liu (2008), and Cheng et al (2009). In addition, Lippman and McCall (1986) have shown that the immediate sale of an illiquid asset is generally not optimal.…”

Section: A Theory Of Optimal Holding Periodmentioning

confidence: 99%

Illiquidity, transaction cost, and optimal holding period for real estate: Theory and application

Cheng

Lin

Liu

2010

Journal of Housing Economics

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Section: A Theory Of Optimal Holding Periodmentioning

confidence: 99%

Illiquidity, transaction cost, and optimal holding period for real estate: Theory and application

Cheng

Lin

Liu

2010

Journal of Housing Economics

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“…bids are

{X_{1}, ..., X_{n}}

. The buyers' arrival follows an exogenous and homogeneous Poisson process with the rate λ. Adams, Kluger and Wyatt (), Lin and Vandell (), Lin and Liu () and Cheng, Lin and Liu (), among others, use the same arrival process in their models. There are several well‐known properties of a homogeneous Poisson process (see, e.g ., Kao ).…”

Section: The Modelmentioning

confidence: 99%

“…The seller accepts the first bid. Lin and Liu () and Cheng, Lin and Liu () use similar settings. However, they do not explicitly consider holding cost, so

P^{*}

is exogenous in their models.…”

Section: The Modelmentioning

confidence: 99%

Optimal Selling Mechanism, Auction Discounts and Time on Market

Gan

2013

Real Estate Economics

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This article examines the optimal selling mechanism problem in real estate market using mean‐variance analysis and downside risk analysis. When sellers can choose between accepting the first offer above a reservation price or auctions (waiting an optimal and fixed time), sellers having higher risk aversion choose auctions and wait a fixed time while sellers having lower risk aversion choose an optimal reservation price and wait a random time. Positive auction discounts are compensated by reduced risks, and there exists a connection between liquidity risk and conditional auction discount. More (Fewer) sellers will choose to sell their houses through auctions in a hot (cold) market or when holding cost increases (decreases). When sellers choose auctions, sellers having higher risk aversion who have lower holding cost wait longer and obtain higher sale price. Loss‐averse sellers unanimously choose the mechanism of setting an optimal reservation price.

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“…Merlo and Ortalo-Magne (2004) have also looked at posted price changes and found that when reductions in asking price occur, they are generally substantial rather than incremental. Cheng et al (2009) review rents studies of the relationship between asking price and TOM in housing markets, they conclude that there is convincing evidence that a negative relationship exists.…”

Section: Empirical Literaturementioning

confidence: 99%

“…As noted by Arnott (1989) "It will be of interest to examine how the behavior of the market differs when it is either growing or contracting, or when it is subject to anticipated or unanticipated shocks and policy changes." (Arnott, 1989, p. 23) One contribution in this direction is Cheng et al (2009), who studies the effects of changing market conditions on sale prices and TOM in the presence of heterogeneously constrained sellers. …”

Section: Theoretical Literaturementioning

confidence: 99%

An Agent-Based Simulation of Rental Housing Markets

2009

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We simulate a closed rental housing market with search and matching frictions, in which both landlord and tenant agents are imperfectly informed of the characteristics of the market. Landlords, who observe a random sample of market offered rents, decide what rent to post based on the expected effect of the rent on the time-on-the-market (TOM) required to find a tenant. Tenants are heterogeneous in income. Each tenant observes their idiosyncratic preference for a random offer and decides whether to accept the offer or continue searching, based on their imperfect knowledge of the offered ret distribution.The steady state to which the simulation evolves shows price dispersion, nonzero search times and vacancies. We further assess the effects of increasing information on either side of the market. Tenants' information level has a positive effect on their welfare. Conversely, landlords are better off when they have less information. In that case they underestimate the TOM and so the steady-state of the market moves to higher rents. However, when landlords with different levels of information are present on the market, the better informed are consistently better off.The model allows the analysis of the dynamics. It is observed that dynamic shocks to the discount rate can provoke overshoots in rent adjustments due in part to landlords use of outdated information in their rent posting decision.

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Home Price, Time-on-Market, and Seller Heterogeneity Under Changing Market Conditions

Abstract: Home price, Time-on-market, Seller heterogeneity, Market conditions,

Cited by 14 publications

References 32 publications

Illiquidity, transaction cost, and optimal holding period for real estate: Theory and application

Illiquidity, transaction cost, and optimal holding period for real estate: Theory and application

Optimal Selling Mechanism, Auction Discounts and Time on Market

An Agent-Based Simulation of Rental Housing Markets

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