Local constant-quality housing market liquidity indices

Dorinth W. van Dijk

Regional Science and Urban Economics, 2024, vol. 106, issue C

Abstract: Market liquidity is an important aspect of housing market developments. The time on market (TOM) of sold properties is frequently used by researchers, practitioners, and policymakers as a market liquidity indicator. Compared to research on house price indices, the literature is very sparse on constructing housing market liquidity indices. This paper proposes a new method to construct constant-quality market liquidity indices based on TOM. The first contribution is that the method improves end-of-sample reliability resulting in fewer revisions. This increases the practical usefulness for business and policy purposes. The second contribution is that the applied structural time series method is designed to work in thin markets. This allows index construction at the local level.

Keywords: Liquidity; Housing; Quality; Index; Thin markets (search for similar items in EconPapers)
JEL-codes: C11 C41 R30 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:regeco:v:106:y:2024:i:c:s0166046224000218

DOI: 10.1016/j.regsciurbeco.2024.103997

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