NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Equity and Time to Sale in the Real Estate Market

David Genesove, Christopher J. Mayer

NBER Working Paper No. 4861
Issued in September 1994
NBER Program(s):   IO

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.

download in pdf format
   (1002 K)

email paper

This paper is available as PDF (1002 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Published: American Economic Review, june 1997.

Users who downloaded this paper also downloaded these:
Chan, Hendershott, and Sanders w3311 Risk and Return on Real Estate: Evidence from Equity REITs
Ashenfelter and Genesove w4036 Testing for Price Anomalies in Real Estate Auctions
Case, Shiller, and Weiss w5078 Mortgage Default Risk and Real Estate Prices: The Use of Index-Based Futures and Options in Real Estate
Chaney, Sraer, and Thesmar w16060 The Collateral Channel: How Real Estate Shocks Affect Corporate Investment
Case and Shiller w2748 The Behavior of Home Buyers in Boom and Post-Boom Markets
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us