Transaction Taxes in a Search Model of the Housing Market

Lundborg, Per; Skedinger, Per

doi:10.1006/juec.1998.2103

Cited by 45 publications

(44 citation statements)

References 10 publications

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“…6 This assumption is in line with previous empirical studies that estimate the effect of moving costs on residential mobility (Lundborg and Skedinger, 1998;Venti and Wise, 1984). Using equations (7), (8) So, we are able to identify the ratio of β to γ, but not β and γ separately.…”

Section: Estimating βsupporting

confidence: 81%

“…As in any microeconomic study, our estimates ignore any macroeconomic effects. In the current context, the study by Lundborg and Skedinger (1998), which employs a housing market equilibrium search model in the spirit of Wheaton (1990), is relevant, since it indicates that a decrease in buyer transaction costs increases equilibrium house prices only slightly suggesting that our estimates are robust with 22 Similarly, in the United States, about 50% of households which move to renting move back to ownership within 5 years (Clark and Dieleman, 1996). 23 In our data, moves are measured only once a year, so households that move to renting and back to owning within a year are treated as moves to owning.…”

Section: Resultsmentioning

confidence: 99%

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New Evidence of the Effect of Transaction Costs on Residential Mobility*

Ommeren¹,

Leuvensteijn²

2005

J Regional Sci

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Abstract. Transaction costs have attracted considerably attention in the theoretical literature on residential mobility. In many European countries, these costs mainly consist of ad-valorem transaction costs. In the current paper, we demonstrate empirically for the Netherlands that the transaction costs have a strong negative effect on the owners' probability of moving. Under a range of different specifications, it appears that a one percent-point increase in the value of transaction costs -as a percentage of the value of the residence -decreases ownership to ownership residential mobility rates by eight percent. The estimates imply that ownership to ownership mobility rates would be 50 percent higher in the absence of the current six percent ad-valorem buyer transaction tax. Our estimates are consistent with the observation that in the Netherlands ad-valorem transaction costs mainly consist of buyer transaction costs.

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Section: Estimating βsupporting

confidence: 81%

Section: Resultsmentioning

confidence: 99%

New Evidence of the Effect of Transaction Costs on Residential Mobility*

Ommeren¹,

Leuvensteijn²

2005

J Regional Sci

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“…Despite this, little is known about their effect on mobility. On the theoretical side, Lundborg and Skedinger (1999) modify Wheaton's (1990) seminal search model of the housing market by adding transfer taxes into the framework. They derive that the lock-in effects of the tax reduce welfare, with the adverse effect being larger at low vacancy rates and smaller with a buyer tax.…”

Section: Introductionmentioning

confidence: 99%

Transfer taxes and household mobility: Distortion on the housing or labor market?

Hilber

Lyytikäinen²

2017

Journal of Urban Economics

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We estimate the effect of the UK Stamp Duty Land Tax (SDLT) -a transfer tax on the purchase price of property or land -on different types of household mobility using micro data. Exploiting a discontinuity in the tax schedule, we isolate the impact of the tax from other determinants of mobility. We compare homeowners with self-assessed house values on either sides of a cut-off value where the tax rate jumps from 1 to 3 percent. We find that a higher SDLT has a strong negative impact on housing-related and short distance moves but does not adversely affect job-induced or long distance mobility. Overall, our results suggest that transfer taxes may mainly distort housing rather than labor markets.

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“…Other studies suggest considering the sensitivity of housing supply when assessing the impact of housing-related fiscal policy on housing market outcomes (e.g., Swank et al, 2002;Hilber & Turner, 2014). Preferential fiscal policy treatment of a specific housing tenure may influence labor market outcomes (e.g., Lundborg & Skedinger, 1999;Haurin & Gill, 2002;Alpanda & Zubairy, 2016). Van Ommeren & Van Leuvensteijn (2005) show that the levy of real estate transfer tax lowers the relocation probability of owner-occupiers.…”

Section: Housing-related Fiscal Policy and Societal Outcomesmentioning

confidence: 99%

“…Barcelo (2006) finds that subsidized tenants' mobility is higher than owner occupiers' mobility; interestingly, Hughes & McCormick (1981) find the opposite. Housing transaction costs can reduce residential mobility (Haurin & Gill, 2002), and may create lock-in effects (Lundborg & Skedinger, 1999). Owner occupiers' moving costs are often higher and therefore their mobility tends to be lower than unsubsidized tenants' mobility (e.g., Van Ommeren & Van Leuvensteijn, 2005;Coulson & Fisher, 2009).…”

Section: Housing Tenure and Societal Implicationsmentioning

confidence: 99%

Housing, Finance, Policy and the Wider Economy

Winkler¹

2017

JMS

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Building an understanding of the complex dynamics between housing, finance, policy and the wider economy is a critical step towards the development of a strategy that permits policy makers to leverage resources and enable the housing market to function better in the pursuit of economic, financial and social objectives. Powerful real, legislative and financial circuits suggest that an enabling strategy for housing can support societal progress and wellbeing. By summarizing the key findings in the existing theoretical and empirical literature, this study helps to explain the complex interrelations between housing, finance, policy and the wider economy by using a simple model; it also deals with housing-related policies and their effects, examines the rational for housing market regulation, investigates whether housing market corrections threaten financial and macroeconomic stability, and asks whether policies are efficacious at controlling housing market outcomes. The important takeaways from this study are: (i) policy setting should be evidence-based, which necessitates further efforts to address existing data deficiencies; (ii) finance trends are in flux and policy effects can be asymmetric, which necessitates regular and critical housing market reviews to identify misallocation, dislocation and reform needs; (iii) improvement in the functioning of the housing market requires a coordinating authority that takes steps to reconcile the various housing market stakeholders' mutually incompatible interests and arrange for concerted policy and institutional reforms. The study closes with an outlook on future research.

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Transaction Taxes in a Search Model of the Housing Market

Cited by 45 publications

References 10 publications

New Evidence of the Effect of Transaction Costs on Residential Mobility*

New Evidence of the Effect of Transaction Costs on Residential Mobility*

Transfer taxes and household mobility: Distortion on the housing or labor market?

Housing, Finance, Policy and the Wider Economy

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