"Equity and Time to Sale in the Real Estate Market"
©
American Economic Review,
June
1997
Volume: 87
|
Issue: 3
|
Pages: 255-69
Publication type: Journal article
Research Archive Topic: Capital Markets and Investments, Real Estate
Abstract
Evidence from the Boston condominium market of the early 1990's reveals that an owner's equity position determines his experience as a seller. An owner of a property with a high loan-to-value ratio sets a higher asking price, has a higher expected time on the market and, if he sells, receives a higher price than an owner with proportionately less debt. The down payment requirement for purchasers, but not incumbent owners, provides a simple explanation for this phenomenon among owner-occupants. The results provide supporting evidence for equity-based aggregate theories of price-volume movements in the housing market.
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