This paper quantitatively accounts for the cyclical dynamics of key macroeconomic housing and mortgage market variables … using a tractable, searchtheoretic model of housing with equilibrium mortgage default. To explain these dynamics, the model … constraints. During housing busts, longer selling times spill over into higher foreclosure risk, thereby magnifying the response …

heterogeneous agents. Our model features an idiosyncratic shock to housing preferences, which may create mismatch or induce … households to move. We calibrate the model to the Australian housing market, and conduct counterfactual policy experiments where … mobility and reduces the degree of housing mismatch substantially. When examining steady states, we find that newborn …