Home Price, Time-on-Market, and Seller Heterogeneity Under Changing Market Conditions Article

Cheng, P, Lin, Z, Liu, Y. (2010). Home Price, Time-on-Market, and Seller Heterogeneity Under Changing Market Conditions . JOURNAL OF REAL ESTATE FINANCE AND ECONOMICS, 41(3), 272-293. 10.1007/s11146-009-9167-1

cited authors

  • Cheng, P; Lin, Z; Liu, Y

authors

abstract

  • This paper develops a formal model to examine the effect of changing market conditions and individuals' selling constraints on selling price and time-on-market. Using the concept of Relative Liquidity Constraint (RLC)-a stochastic variable that captures the randomness of future individual constraints and market conditions-the study presents the first ex ante analysis that extends the investigation of the issue of seller heterogeneity to the point of the buying decision, that is, from the perspective of the buyer's (future seller's) point of view. We show that seller constraint, as well as the uncertainty of such a constraint, significantly depresses the expected selling price and increases risk. Our closed-form formulas provide a set of simple quantitative tools that enable buyers and sellers to adjust the "market average" to their ex ante "individual expectations". © 2009 Springer Science+Business Media, LLC.

publication date

  • January 1, 2010

published in

Digital Object Identifier (DOI)

start page

  • 272

end page

  • 293

volume

  • 41

issue

  • 3