Publications [#320563] of Patrick Bayer

Journal Articles

1. Anenberg, E; Bayer, P, Endogenous Sources of Volatility in Housing Markets: The Joint Buyer-Seller Problem, Economic Research Initiatives at Duke (ERID) no. 141 (December, 2014), pp. 63 pages
   (last updated on 2024/04/19)

   Abstract:
   This paper presents new empirical evidence that internal movement - selling one home and buying another - by existing homeowners within a metropolitan housing market is especially volatile and the main driver of fluctuations in transaction volume over the housing market cycle. We develop a dynamic search equilibrium model that shows that the strong pro-cyclicality of internal movement is driven by the cost of simultaneously holding two homes, which varies endogenously over the cycle. We estimate the model using data on prices, volume, time-on-market, and internal moves drawn from Los Angeles from 1988-2008 and use the fitted model to show that frictions related to the joint buyer-seller problem: (i) substantially amplify booms and busts in the housing market, (ii) create counter-cyclical build-ups of mismatch of existing owners with their homes, and (iii) generate externalities that induce significant welfare loss and excess price volatility.