Buying first or selling first in housing markets

Espen Moen*, Plamen Nenov, Florian Sniekers

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

Abstract

Housing transactions by moving homeowners take two steps - buying a new house and selling the old one. This paper argues that the transaction sequence decisions of moving homeowners have important effects on the housing market. Moving homeowners prefer to buy first whenever there are more buyers than sellers in the market. However, this congests the buyer side of the market and increases the buyer-seller ratio, further strengthening the incentives of other moving owners
to buy first. This endogenous strategic complementarity leads to multiple steady state equilibria and large fluctuations, which are broadly consistent with stylized facts about the housing cycle.
Original languageEnglish
JournalJournal of the European Economic Association
Publication statusAccepted/In press - Aug 2019

Fingerprint

Housing market
Buyers
Seller
Stylized facts
Incentives
Fluctuations
Strategic complementarity

Keywords

  • search frictions
  • order of transactions
  • strategic complementarity
  • coordination
  • self-fulfilling fluctuations

Cite this

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title = "Buying first or selling first in housing markets",
abstract = "Housing transactions by moving homeowners take two steps - buying a new house and selling the old one. This paper argues that the transaction sequence decisions of moving homeowners have important effects on the housing market. Moving homeowners prefer to buy first whenever there are more buyers than sellers in the market. However, this congests the buyer side of the market and increases the buyer-seller ratio, further strengthening the incentives of other moving ownersto buy first. This endogenous strategic complementarity leads to multiple steady state equilibria and large fluctuations, which are broadly consistent with stylized facts about the housing cycle.",
keywords = "search frictions, order of transactions, strategic complementarity, coordination, self-fulfilling fluctuations",
author = "Espen Moen and Plamen Nenov and Florian Sniekers",
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language = "English",
journal = "Journal of the European Economic Association",
issn = "1542-4774",
publisher = "Wiley-Blackwell",

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Buying first or selling first in housing markets. / Moen, Espen; Nenov, Plamen; Sniekers, Florian.

In: Journal of the European Economic Association, 08.2019.

Research output: Contribution to journalArticleScientificpeer-review

TY - JOUR

T1 - Buying first or selling first in housing markets

AU - Moen, Espen

AU - Nenov, Plamen

AU - Sniekers, Florian

PY - 2019/8

Y1 - 2019/8

N2 - Housing transactions by moving homeowners take two steps - buying a new house and selling the old one. This paper argues that the transaction sequence decisions of moving homeowners have important effects on the housing market. Moving homeowners prefer to buy first whenever there are more buyers than sellers in the market. However, this congests the buyer side of the market and increases the buyer-seller ratio, further strengthening the incentives of other moving ownersto buy first. This endogenous strategic complementarity leads to multiple steady state equilibria and large fluctuations, which are broadly consistent with stylized facts about the housing cycle.

AB - Housing transactions by moving homeowners take two steps - buying a new house and selling the old one. This paper argues that the transaction sequence decisions of moving homeowners have important effects on the housing market. Moving homeowners prefer to buy first whenever there are more buyers than sellers in the market. However, this congests the buyer side of the market and increases the buyer-seller ratio, further strengthening the incentives of other moving ownersto buy first. This endogenous strategic complementarity leads to multiple steady state equilibria and large fluctuations, which are broadly consistent with stylized facts about the housing cycle.

KW - search frictions

KW - order of transactions

KW - strategic complementarity

KW - coordination

KW - self-fulfilling fluctuations

M3 - Article

JO - Journal of the European Economic Association

JF - Journal of the European Economic Association

SN - 1542-4774

ER -