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Days on market and home sales

Authors


  • We thank Judith Chevalier and two anonymous reviewers for their excellent suggestions. We thank Panle Jia Barwick, Pradeep Chintagunta, Laurence Debo, Peng Liu, Valeria Montero, Duncan Simester, and William Wheaton for their helpful comments. We thank John Corcoran of Otis & Ahearn, Walter Molony and Jed Smith of the National Association of Realtors, Elizabeth Weintraub of Lyon Real Estate, and several anonymous realtors for sharing their insights of the real estate market. We thank David Bermejo, Ryan Brunswick, Javier Hernandez, and Hout Nga for their outstanding research assistance. We gratefully acknowledge financial support from the NET Institute.

Abstract

In 2006, Massachusetts adopted a new policy that prohibits home sellers from resetting their properties’ days on market through relisting. Massachusetts homes exposed to the policy change experienced a $16,000 reduction in sale price relative to Rhode Island homes. Slow-moving homes suffered a greater reduction, but newer listings only had a small increase in sale price. One reason is that some buyers were unaware of sellers’ manipulation of days on market and thus unable to recognize authentically new listings. Sellers reacted to the new policy by cutting listing prices, although in towns where listing price history was transparent, sellers raised listing prices to dampen the stigma of slow sales.

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