Equity and time to sale in the real estate market

Evidence from the Boston condominium market of the early 1990's reveals that an owner's equity position determines his experience as a seller. An owner of a property with a high loan-to-value ratio sets a higher asking price, has a higher expected time on the market and, if he sells, receives a higher price than an owner with proportionately less debt. The down payment requirement for purchasers, but not incumbent owners, provides a simple explanation for this phenomenon among owner-occupants. The results provide supporting evidence for equity-based aggregate theories of price-volume movements in the housing market. (JEL R31, D83)