Modelling Housing Market Search

William A. V. Clark

• Publisher: Routledge
• Year: 2021
• ISBN:
  9781000401363
• Edition: 1
• Topic: Scienze sociali
• Subtopic: Sociologia urbana

Originally published in 1982, this book contains research in the area of econometric modelling in the housing market, including that which has extended to the use of search models. The subjects covered include the importance of racial differences, spatial aspects of residential search and information provision and its effect on the behaviour of the buyers. The combination of careful analytic modelling, empirical testing and speculative discussions of the role of agents in the search process provides an innovative and imaginative approach to the interesting problems of understanding the individual behaviour in complex contexts such as the urban housing market.

Part IMODELS OF SEARCH BEHAVIOR

DOI: 10.4324/9781003182085-1

The chapters in this book have been divided into two broad sections. The first of these sections focuses on models of search behavior. The second is concerned with the nature of information and its influence on search behavior. The chapters in the first part of the book are organized to review the general nature of search models, and particularly, their application to search in the housing market, to present a conceptual approach to housing search, and specific analytic models of the search for housing. The papers represent general conceptual and specific analytic models and empirical tests of the models. They are representative of the latest thinking on applied residential search models in geography and economics.

While the work by economists on job search stimulated the development of a variety of econometric models of search behavior, most of this work focused on stopping rule models and has had only limited application to search in the housing market. The economic research emphasized equilibrium analysis and the clearing conditions in the market. Recently, specific studies of housing market search have attempted to develop more realistic models of search behavior. The first chapter organizes previous analyses of housing market search into six categories, two of which are concerned with disequilibrium models of search, another focuses on stopping rule models, and the other three focus on the analysis of institutional constraints on search, the role of information, and specific studies of spatial search in the housing market. The chapter argues that much of the research has been cross-sectional and emphasized either utility maximizing approaches or institutional intervention. However, the most recent research is clearly focused on the central role of information in search behavior. As an overview the review sets up a basis for the more specific chapters which follow. Kevin McCarthy outlines a conceptual model of housing search and mobility, Gavin Wood and Duncan Maclennan discuss search adjustment in the local housing market of Glasgow, Frank Cronin analyses racial differences in the search for housing and Jim Huff models the spatial aspects of residential search.

The second chapter outlines a three-stage model of the search process in which there is a distinction between the decision to move, the decision to search, and the housing choice itself. McCarthy specifies an analytic formulation for each of these stages which emphasizes local mobility as the vehicle for housing consumption adjustment. One of the major elements of this conceptual model is the role of transaction costs in search and the discounts that people get from various intensities of search. Although a complete test of the model has not yet been concluded, there is preliminary evidence to indicate that there is considerable variation amongst households (in their search behavior), that supply conditions are likely to affect search processes, and finally, that search procedures appear to affect outcomes, although not necessarily in the same way for owners and renters.

Wood and Maclennan contend that the static neo-classical models of consumer demand do not represent a plausible framework in which to analyze housing choice situations. They outline the relevant features of the housing market and then establish that search activities are an important component of the process of purchase. Given this premise, they develop a model of “the search adjustment process” in which search costs and information are central components of search. They investigate both search by students in the rental housing market and entry into the privately owned housing market. One of the most interesting parts of the model and its empirical test in the Glasgow housing market is the realization that the investigation of search in the housing market may be as relevant in a controlled housing market as it is in a “free” market.

Chapter 4 is an illustration of the classic disequilibrium approach to search. Cronin uses this approach to analyze the effectiveness of search by minority households, including the differences in information services, modes of transportation used in search, the length of search, and the number of neighborhoods searched. The chapter is an excellent example of the disequilibrium approaches that have been the mainstay of models of search behavior in the housing market. The results confirm differences (for minority and nonminority households) that are not so much in the ends obtained from the search process, but rather, from quite different strategies involved in search behavior.

The final chapter in the first part of the book is a specific investigation of spatial search. As Huff argues, one of the basic stimuli for investigating spatial search relates to the integral link between where people are looking and where people ultimately relocate. And, if there is some stability in the patterns of household search then these may provide a clue to ultimate population relocation patterns. Huff develops what he calls an area-based search model in which an area is first selected for search and second vacancies within the area are targeted. The model assumes that the household uses one or more sources to acquire indirect information on selected attributes of vacancies -- certain vacancies are rejected solely on the basis of the indirect information, while others are considered to be viable possibilities. The household proceeds to visit vacancies in the possibility set until a new residence is found or the household stops searching. Members of the possibility set which are located in areas of the city with relatively low expected search costs are assumed to have a higher probability of being identified for visits than members located in higher search cost areas. The formal model of the search process is shown to be a first order Markov chain, where the probability of searching in a given area is a function of the location of the last vacancy seen by the household and the relative concentration of possible acceptable vacancies.

These chapters illustrate two important points. First, they represent attempts to take what we know or suspect about the spatial aspects of residential search, to express these ideas in formal terms and ...

Table of contents

• Cover Page
• Half-Title Page
• Title Page
• Copyright Page
• Original Title Page
• Original Copyright Page
• Table of Contents
• Preface
• Part I: Models of Search Behavior
• Part II: Information, Search, and Policy Responses
• The Contributors
• Index