Price and Trading Volume in Real Estate Markets

Ping Cheng, Zhenguo Lin and Yingchun Liu

ERES from European Real Estate Society (ERES)

Abstract: This study examines the widely documented positive price-volume correlation in the housing market. Unlike some earlier studies that hinge upon the presumption of sellers’ liquidity constraints, we develop a search model in which rational sellers with search costs seek to optimize their selling objectives. We show that the positive price volume correlation at the macro market level is merely the result of individual sellers (rationally) seeking optimal selling outcomes at the micro market level. Our further analysis reveals rich insights into the intricate relationships among housing prices, time-on-market, and trading volume in the housing market. It lends broad theoretical support to a number of prior empirical studies and reconciles some of the conflicting findings.

Keywords: Price; Real Estate Markets; Trading Volume (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2023-01-01
New Economics Papers: this item is included in nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:arz:wpaper:eres2023_334

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