List Prices in the US Housing Market
30 Pages Posted: 13 Aug 2016 Last revised: 21 Jan 2017
Date Written: February 29, 2016
A seller sets the list price based upon their ex-ante perception of the trade-off between marketing duration versus transaction price, which depends on the liquidity of the property and the depth of the market. As such, list prices reflect property, market, and seller characteristics. In addition, Genesove and Mayer (2001) and Bokhari and Geltner (2011) use prospect theory to motivate how expected nominal losses and gains from sale can also influence list prices. We consider these multiple factors affecting list prices through a rich dataset from the National Association of Realtors, which contains variables on seller motivations, structure liquidity, and other difficult to observe variables such as seller age, race, and income.
Keywords: List prices, Sellers’ motivations, Sellers’ characteristics, Loss aversion, Urgency, List price reductions
JEL Classification: R31
Suggested Citation: Suggested Citation