Segmented Housing Search

Monika Piazzesi, Martin Schneider, Johannes Stroebel

NBER Working Paper No. 20823
Issued in January 2015, Revised in May 2019
NBER Program(s):The Asset Pricing Program, The Economic Fluctuations and Growth Program, The Monetary Economics Program, The Public Economics Program

We study housing markets with multiple segments searched by heterogeneous clienteles. In the San Francisco Bay Area, search activity and inventory covary negatively across cities, but positively across market segments within cities. A quantitative search model shows how the endogenous flow of broad searchers to high-inventory segments within their search ranges induces a positive relationship between inventory and search activity across segments with a large common clientele. The prevalence of broad searchers also shapes the response of housing markets to localized supply and demand shocks. Broad searchers help spread such shocks across many segments and thereby reduce their effect on local market activity.

Acknowledgments

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Document Object Identifier (DOI): 10.3386/w20823

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