The Thick Market Effect on Housing Markets Transactions

Li Gan () and Qinghua Zhang

No 12134, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper provides a search model for housing market where the number of buyers and/or sellers plays very important role. The model makes three testable predictions: (1) the unemployment rate has a negative impact on the trading volume and the sale prices of the housing market; (2) a larger housing market has a lower average sale price, shorter time-to-sale and smaller price dispersion, in addition to a lower vacancy rate. (3) In a larger housing market, when the unemployment rate goes up (or down), the sale price decreases (or increases) by a smaller percentage than in a smaller market. All three predictions are supported by a panel dataset of the Texas city-level housing markets.

JEL-codes: R0 R3 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-fmk, nep-geo and nep-ure
Date: 2006-04
Note: AP
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