A spatiotemporal solution for the simultaneous sale price and time-on-the-market problem

Authors: Dubé, Jean; Legros, Diègo
Abstract: There exists an important methodological challenge when dealing with sale price and time-on-the-market variables because both variables are simultaneously determined and related to the motivation of the sellers and buyers. Exploiting the fact that transactions occur over space and time, we propose a two-stage approach based on instrumental variables (IV) built from information collected from previous transactions. The unidirectional temporal property and the fact that other transactions are exogenous from the perspective of a single buyer or seller are exploited to evaluate the effect of the sale price on time-on-the-market, and the effect of time-on-the-market on the sale price. Based on 29,471 transactions occurring in the suburban neighborhood of Montréal (1992-2000), the results suggest that, everything else being equal, houses staying longer on the market provide negative information to the market, which results in a lower final sale price, while the final sale price is negatively related to time-on-the-market, indicating that houses of better quality (better amenities) stay less time on the market.
Document Type: Article de recherche
Issue Date: 9 October 2015
Open Access Date: Restricted access
Document version: VoR
Permalink: http://hdl.handle.net/20.500.11794/1748
This document was published in: Real Estate Economics, (2015)
https://doi.org/10.1111/1540-6229.12121
American Real Estate and Urban Economics Association
Alternative version: 10.1111/1540-6229.12121
Collection:Articles publiés dans des revues avec comité de lecture

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