Housing search frictions and optimal search

Hans R.A. Koster, Jos van Ommeren*

*Corresponding author for this work

Research output: Contribution to JournalArticleAcademicpeer-review

Abstract

By deriving a ‘housing market Hosios condition’, we show that the main conclusions of the seminal paper on housing search frictions by Wheaton (1990) were erroneously derived. We show that households may search too much, optimally, or too little, which is in contrast to the paper's conclusion that they always search too little. Furthermore, we show that exogenous increases in housing vacancies always have a negative effect on house prices, given standard assumptions.

Original languageEnglish
Article number108980
Pages (from-to)1-3
Number of pages3
JournalEconomics Letters
Volume189
Early online date25 Feb 2020
DOIs
Publication statusPublished - 1 Apr 2020

Keywords

  • Housing market
  • Optimal search
  • Search frictions

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