Price Dispersion and Time-on-Market in the Housing Market

Imperfect and costly information generates price dispersion in the market. This study employs data on housing assets listed for sale on a leading online classified home service in Israel to assess the effect of quality-adjusted housing price dispersion on time-on-market. We develop a model by which we generate the hypothesis according to which increased price dispersion is associated with a decrease in the hazard of a sale. Based on survival analysis estimation, our empirical results provide evidence that the hazard rate of sale significantly decreases with quality-adjusted price dispersion. Results are robust to a series of model and sample specifications. As information reduces price dispersion in the market, our study supports the call for increased transparency and availability of information in real estate markets