"Fire Sales" in Housing Market: Is the House- Search Process Similar to a Theme Park Visit?

Charles Leung and Jun Zhang
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Jun Zhang: City University of Hong Kong

International Real Estate Review, 2011, vol. 14, issue 3, 311-329

Abstract: Three striking empirical regularities have been repeatedly reported: the positive correlation between housing prices and trading volume, and between housing price and time-on-the-market (TOM), and the existence of price dispersion. This short paper provides perhaps the first unifying framework which mimics these phenomena in a simple competitive search framework. In the equilibrium, sellers with heterogeneous waiting costs and buyers are endogenously segregated into different submarkets, each with distinct market tightness and prices. With endogenous search efforts, our model also reproduces the well-documented price- volume correlation. Directions for future research are also discussed.

Keywords: Housing market; Competitive search; Price dispersion; Trading volume; Time on the market (search for similar items in EconPapers)
JEL-codes: L85 (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (24)

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