HOUSINGNEWS REPORT
MY TAKE
household’s financial position and in turn, its search and bargaining costs.
Certain elements in property data collected from county assessor and recorder offices might be used to proxy for differences in search and bargaining costs across buyers and sellers.”
In a preliminary analysis, a standard hedonic regression model was estimated, controlling for location of home, housing characteristics, time of sale, and a host of other characteristics that determine house price. Then an indicator variable was added to denote those houses that were owned outright by the seller. The analysis suggested that homes that were owned outright sell for approximately 3 to 4 percent less than other comparable homes! A similar exercise was performed for buyers that payed completely in cash rather than using some form of financing to purchase the home. Again, the analysis suggested that these homes
The same may be true for buyers that are unable to devote as much time and effort to search and bargaining as other buyers. If one were to have data on the time and effort spent by buyers and sellers in the housing market, this could be used to supplement the standard method economists use to estimate the functional relationship between housing prices and housing characteristics. Linking direct measures of time and effort for buyers and sellers with housing prices and characteristics is likely a daunting empirical effort;
however, there may be another possible solution for tackling this problem.
Certain elements in property data collected from county assessor and recorder offices might be used to proxy for differences in search and bargaining costs across buyers and sellers. For example, using mortgage and deed data provided by ATTOM Data Solutions, one can determine if a seller owns their house outright rather than having taken out a loan to pay for the house. This key characteristic might proxy for the
JUNE 2017
ATTOM DATA SOLUTIONS • P13
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