Theoretical and Empirical Analysis of the Multi-Period Pricing Pattern in the Real Estate Market

We examine empirically and theoretically the multi-period pricing pattern in the real estate market. First, in a game theoretic framework, we identify conditions for determining whether potential closing prices increase or decrease and marginally increase with time on market. Then, by observing rental housing transactions, we empirically find evidence that the difference between the list price and the settlement price rises and marginally decreases with time on market. This empirical result supports a Perfect Nash Equilibrium previously proposed in the model