Segmented Housing Search
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.
We thank Ed Glaeser, Bob Hall, Brian Higgins, John Leahy, Giuseppe Moscarini, Robert Shimer, Vincent Sterk, Silvana Tenreyro, four anonymous referees, and conference and seminar participants at the AEA meetings, Arizona State, Berkeley, Chicago, Harvard, LBS, Mannheim, Michigan, Minneapolis Fed, Minnesota, MIT, NBER Summer Institute, Northwestern, NYU, Philadelphia Fed, SITE, SED, Stanford, Tsinghua, UCLA, USC, and Yale. We also thank Trulia for providing data. This research is supported by an NSF grant. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
Monika Piazzesi & Martin Schneider & Johannes Stroebel, 2020. "Segmented Housing Search," American Economic Review, vol 110(3), pages 720-759.