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Endogenous Realtor Intermediation and Housing Market Liquidity

Author

Listed:
  • Miroslav Gabrovski
  • Ioannis Kospentaris
  • Victor Ortego-Marti

    (Department of Economics, University of California Riverside)

Abstract

This paper develops a housing search model to analyze the role of realtors in fa- cilitating transactions and shaping housing market liquidity. Motivated by the recent landmark settlement between the National Association of Realtors and home sellers’ associations, we contrast two market structures: a directed search equilibrium, where sellers post prices and fees, and a random search equilibrium, where matched agents bargain the terms of trade bilaterally. A comparison between the two models suggests that the settlement may have unintended consequences that lower buyers’ welfare: ran- dom search features 2.5% higher prices, 17% lower sales, and 23% fewer buyers entering the market than the directed search equilibrium. Our results highlight the importance of explicitly considering realtor entry and market liquidity for a comprehensive evalu- ation of housing market reforms.

Suggested Citation

  • Miroslav Gabrovski & Ioannis Kospentaris & Victor Ortego-Marti, 2024. "Endogenous Realtor Intermediation and Housing Market Liquidity," Working Papers 202410, University of California at Riverside, Department of Economics.
    • Handle: RePEc:ucr:wpaper:202410
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    Housing market; Search and matching; Housing Market Liquidity; Directed Search; Random Search;
    All these keywords.

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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