Equity and Time to Sale in the Real Estate Market

David Genesove, Christopher J Mayer

Research output: Working paper/preprintWorking paper

Abstract

Recent research has proposed a pro-cyclical link between sales volume and prices in the real estate market through changes in the equity of existing homeowners. This article uses data from the Boston condominium market to show that owners with high loan-to-value ratios take longer to sell their properties than owners with low loan-to- value ratios. Properties with high loan-to-value ratios are listed at higher asking prices; when sold, they receive higher prices than units with less debt. Together, these results are consistent with a search model in which owners 'constrained' by large amounts of debt set a higher reservation price than 'unconstrained' owners, accepting a lower probability of sale in exchange for a higher final sales price.
Original languageEnglish
Place of PublicationCambridge, Mass
PublisherNational Bureau of Economic Research
Number of pages30
DOIs
StatePublished - 1994

Publication series

NameNBER working paper series
PublisherNational Bureau of Economic Research
Volumeno. w4861

Bibliographical note

September 1994.

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