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  3. American Economic Review
  4. December 2014
  5. Hot and Cold Seasons in the Housing Market

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

Hot and Cold Seasons in the Housing Market

  • L. Rachel Ngai
  • Silvana Tenreyro
American Economic Review
vol. 104, no. 12, December 2014
(pp. 3991–4026)
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Abstract

Every year housing markets in the United Kingdom and the United States experience systematic above-trend increases in prices and transactions during the spring and summer ("hot season") and below-trend falls during the autumn and winter ("cold season"). House price seasonality poses a challenge to existing housing models. We propose a search-and-matching model with thick-market effects. In thick markets, the quality of matches increases, rising buyers' willingness to pay and sellers' desire to transact. A small, deterministic driver of seasonality can be amplified and revealed as deterministic seasonality in transactions and prices, quantitatively mimicking seasonal fluctuations in UK and US markets. (JEL C78, R21, R31)

Citation

Ngai, L. Rachel, and Silvana Tenreyro. 2014. "Hot and Cold Seasons in the Housing Market." American Economic Review, 104 (12): 3991–4026. DOI: 10.1257/aer.104.12.3991

Additional Materials

JEL Classification

  • C78 Bargaining Theory; Matching Theory
  • R21 Urban, Rural, Regional, Real Estate, and Transportation Economics: Housing Demand
  • R31 Housing Supply and Markets