Housing: Difference Price, Same Market — No Arbitrage

As Floyd Norris points out in today’s NY Times, the real estate market is an unusual one in that, in a sense, it isn’t a proper market at all:

Home prices are perhaps the only market where buyers and sellers measure prices quite differently. Sellers see a price of $500,000, or whatever it might be. Buyers see a price of so much a month. As rates fell, the seller’s price could soar while the buyer’s price did not. As mortgage rates rise, the reverse will be true…