Template-type: ReDIF-Paper 1.0
Author-Name: Antonia Díaz
Author-Email: antonia.diaz@ucm.es
Author-Person: pda65
Author-Workplace-Name: Instituto Complutense de Análisis Económico (ICAE), Universidad Complutense de Madrid (Spain).
Title: Credit and Inventories in Illiquid Housing Markets
Abstract: Wealthier, risk-averse buyers pay more to expedite up transactions in competitive search markets. This, coupled with forward-looking intermediaries who hold vacant homes overnight, 
	implies that a credit expansion produces a boom in prices that slowly recedes over time. This boom is due to a combination of two effects. First, search and matching frictions imply that 
	buyers are willing to pay a higher price to trade faster, not only to consume housing services.
	Second, the fact that intermediaries are forward-looking implies that trading probabilities today depend on the future evolution of prices. Since agents forecast that prices are higher than in 
	the initial steady state, they turn to trading today. Our theory produces a boom in prices that slowly recedes and a gradual rise of homeownership rate.
Classification-JEL: D31, D83, E21, R21, R30.
Keywords: Competitive search; Wealth effects; Housing prices; Credit constraints; Housing supply; Elasticity; Rental market; Transitional dynamics.
Length: 29 pages 
Creation-Date: 2024
Number: 2024-04
X-File-Ref: http://america.sim.ucm.es/repec/ucm/ref/doicae2404.txt
File-URL: https://hdl.handle.net/20.500.14352/108625
File-Format: Application/html
Handle: RePEc:ucm:doicae:2404