RT Generic T1 Housing prices and credit constraints in competitive search A1 Diaz Rodriguez, Antonia A1 Jerez Garcia-Vaquero, Maria Belen A1 Rincón-Zapatero, Juan Pablo A2 Universidad Carlos III de Madrid. Departamento de Economía, AB We embed a competitive search model of the real estate market into a heterogeneous agentsetting where hoeholds face credit constraints and idiosyncratic turnover shocks. Householdscan accumulate a risk-free asset to build a down payment and to smooth non-housing consumption.There is an inelastic supply of identical homes. The model is "block recursive". Inequilibrium wealthier home buyers sort into submarkets with higher prices and shorter buyingtimes. We identify a novel amplification mechanism, arising from sorting, by which demandshocks can substantially affect housing prices. In particular, lowering down payment requirementsinduces entry of new buyers in the market and higher asset accumulation by currentsearchers, as these agents target more expensive (less congested) submarkets. This affects thedistribution of prices and trading probabilities, and thereby the wealth distribution. Our quantitativeresults suggest that the effects on the long-run level and dispersion of housing pricescan be significant. SN 2340-5031 YR 2020 FD 2020-06-19 LK https://hdl.handle.net/10016/30623 UL https://hdl.handle.net/10016/30623 LA eng NO Support from the Spanish Ministerio Economía y Competitividad, grants ECO2016-76818-C3-1-Pand ECO2017-86261-P, MDM 2014-0431, and Comunidad de Madrid, MadEco-CM (S2015/HUM-3444), is gratefullyacknowledged. DS e-Archivo RD 14 ago. 2024