I am a Ph.D. candidate at the University of Minnesota,
entering ** the 2024/25 Economics Job Market**.

My research focuses on macroeconomics,
with a particular interest in housing markets,
intermediation, and spatial economics.

I hold an M.Sc. in Quantitative Economics from UniversitÃ© Paris 1
PanthÃ©on-Sorbonne, as well as a B.Sc. in Mathematics
from the University of Warsaw
and a B.Sc. in Economics from the Warsaw School of Economics.

Email: pawel042@umn.edu

**Abstract:** How does intermediation in the housing market affect an economy's house price distribution, trade volume, and welfare?
I study ** flipping houses** - fast buying and reselling houses, which has become more prevalent in recent years. While more flipping increases market thickness, it also involves intermediaries holding housing assets instead of households. Which effect dominates for welfare? To answer these questions, I develop a decentralized trade model with intermediaries with two-sided heterogeneity in inventory and housing asset valuation, where households trade houses with each other or with flippers. Search is random, information is asymmetric, and household valuations evolve stochastically. Using a universe of administrative transaction data from Ireland, I document a steady increase in house prices, trade volume, and flipped transactions between 2012 and 2022. In particular, I find that the number of flipped transactions doubled. Through a calibrated model, I use an increase in the mass of flippers to cause an increase in flipping. This increase in flipping led to a 1.5% decrease in average house prices, implying the increase in house prices seen in the data was not caused by flippers, but instead by the decrease in mortgage rates.
The increase in flipping in the model caused a modest increase in trade volume as compared to the data.
Finally, I find the increase in flipping caused an average decrease in household welfare of 0.2%, chiefly by decreasing the steady state fraction of households owning a home. On the positive side, misallocation of housing due to search frictions decreased.

What is the role of intermediation on house price distribution, trade volume and welfare in a decentralized market for houses?

Model of decentralized trade with an intermediary. House is homogenous good, taste for it$\delta$, heterogenous across households. The search is random, the types are heterogeneous, and the information is asymmetric. Flipper meets faster and doesn't observe $\delta$ when proposes a price. Key equation $\Delta V(\delta)$ reservation value of hh: $$\sigma(\delta)\Delta V(\delta)=\delta+\gamma\int_0^1\Delta V(\delta')dG(\delta')+\lambda F(0)\Delta V(\delta_1)1[\delta<\delta_1]+\lambda F(1)\Delta V(\delta_0) 1[\delta>\delta_0]+$$ $$+\frac{\rho}{2}\int_\delta^1 \Delta V(\delta') dH(0,\delta')+\frac{\rho}{2}\int_0^\delta \Delta V(\delta') dH(1,\delta')$$ where endogenous discount rate $\sigma(\delta)$: $$\sigma(\delta)=r+\gamma+\lambda F(0) 1[\delta<\delta_1]+\lambda F(1) 1[\delta>\delta_0]+\frac{\rho}{2}\int_\delta^1 dH(0,\delta')+\frac{\rho}{2}\int_0^\delta dH(1,\delta')$$

I develop a model of decentralized trade with intermediary. Search is random, types are heterogeneous, and information is asymmetric.

- I endogenize middleman's asset holding.
- I developed an algorithm for cutoff equilibrium with continuous time methods.
- To study intermediation ↑ ↔ the mass of intermediary ↑.

I use the universe of house transaction data in Ireland.

- I use it to identify flippers ≈ double between 2012 and 2021 in Ireland.

I quantify the effects of intermediation.

- Negative price spillover, trade ↑, welfare ↓.

I assess the effects of tax on flipping: current non-owners welfare ↓. Robustness: vary holding time of asset, results are consistent.

** My results suggest that there are non-trivial costs of ***intermediation*.