Housing prices and credit constraints in competitive search Antonia Díaz, Belén Jerez, Juan Pablo Rincón-Zapatero
By: Díaz Rodríguez, Antonia
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Contributor(s): Jerez, Belén | Rincón Zapatero, Juan Pablo.
Material type: 
ArticleSubject(s): VIVIENDA | PRECIOS | OFERTA Y DEMANDA | RENTA | DISTRIBUCION | AHORRO | CREDITO | PRESTAMOS HIPOTECARIOS | MODELOS ECONOMETRICOS
In:
The Economic Journal v. 134, n. 657, January 2024, p. 220-270Summary: Wealthier, risk-averse buyers pay more to speed up transactions in competitive search markets. This result is established in a dynamic housing model where households save to smooth consumption and build a down payment. ‘Block recursivity’ is ensured by the existence of risk-neutral housing intermediaries. In the long run, the calibrated benchmark features higher indebtedness and house prices than a Walrasian model, especially when housing supply elasticity is low. The long-run price effects of greater credit availability are much larger if rental and owner-occupied stocks are segmented, but even without segmentation they can be substantial when supply elasticity is low.
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Wealthier, risk-averse buyers pay more to speed up transactions in competitive search markets. This result is established in a dynamic housing model where households save to smooth consumption and build a down payment. ‘Block recursivity’ is ensured by the existence of risk-neutral housing intermediaries. In the long run, the calibrated benchmark features higher indebtedness and house prices than a Walrasian model, especially when housing supply elasticity is low. The long-run price effects of greater credit availability are much larger if rental and owner-occupied stocks are segmented, but even without segmentation they can be substantial when supply elasticity is low.
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