This award funds research that will bring new data to bear on important questions about how the real estate brokerage industry affects the way that residential housing markets function. The major goal is to examine the effect of the current commission system and the market structure of the market for brokerage services on market outcomes. The rich data set that covers all properties listed in the Multiple Listing Service (MLS) from January 1998 to January 2008 in all sixty cities and towns within a fifteen-mile radius of downtown Boston, with a total of 290,378 observations and 20,791 agents. In addition, the research team will merge this data set with several other data sources, including the Massachusetts license database, a commercial dataset on changes in ownership from the Warren group and data from the Home Mortgage Disclosure Act, as well as various Census datasets. The data set is ideally suited for a variety of important questions, including whether or not free entry of real estate agents is socially efficient, how realtors and brokerage firms affect home buyers' choices, and the role of commissions in determining the market outcome.
This research will use state-of-the art data analysis methods to improve our understanding of an important industry. The results of this research should benefit state and local policymakers, real estate regulators, and the broader community interested in how housing market outcomes contribute to the macroeconomy.
