A fundamentalist theory of real estate market outcomes

This study introduces and estimates a structural model of search and matching in real estate markets. There are benefits of developing such a theory to better understand the structure that determines these processes. First, the estimation method accurately and efficiently models the structural demand and supply functions of buyers and sellers. Second, the model replicates several salient features of real estate markets with respect to how sales price and weeks on the market are correlated across time and sellers. Finally, despite full seller rationality, the model predicts sticky sales prices by fact of the trade-off between price and weeks on the market.