INFORMATION, SEARCH, AND HOUSE PRICES

Different groups of homebuyers have varying levels of information about the housing market as well as different search costs. Is the housing market efficient enough to 'protect' less informed buyers from paying more for comparable houses? And are search cost differentials large enough to induce significantly different prices across types of buyers? We examine these questions using a unique data base that allows us to compare house price across various groups of homebuyers. Surprisingly, the results reveal no systematic price differentials across types of buyers in the market.