Credit and Inventories in Illiquid Housing Markets
Wealthier, risk-averse buyers pay more to expedite up transactions in competitive search markets. This, coupled with forward-looking intermediaries who hold vacant homes overnight, implies that a credit expansion produces a boom in prices that slowly recedes over time. This boom is due to a combinat...
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| Tipo de recurso: | informe técnico |
| Fecha de publicación: | 2024 |
| País: | España |
| Institución: | Universidad Complutense de Madrid (UCM) |
| Repositorio: | Docta Complutense |
| Idioma: | inglés |
| OAI Identifier: | oai:docta.ucm.es:20.500.14352/108625 |
| Acceso en línea: | https://hdl.handle.net/20.500.14352/108625 |
| Access Level: | acceso abierto |
| Palabra clave: | D31 D83 E21 R21 R30 Competitive search Wealth effects Housing prices Credit constraints Housing supply Elasticity Rental market Transitional dynamics. Economía 53 Ciencias Económicas |
| Sumario: | Wealthier, risk-averse buyers pay more to expedite up transactions in competitive search markets. This, coupled with forward-looking intermediaries who hold vacant homes overnight, implies that a credit expansion produces a boom in prices that slowly recedes over time. This boom is due to a combination of two effects. First, search and matching frictions imply that buyers are willing to pay a higher price to trade faster, not only to consume housing services. Second, the fact that intermediaries are forward-looking implies that trading probabilities today depend on the future evolution of prices. Since agents forecast that prices are higher than in the initial steady state, they turn to trading today. Our theory produces a boom in prices that slowly recedes and a gradual rise of homeownership rate. |
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