“Fire Sales” in housing market: is the house-searching process similar to a theme park visit?

Charles Leung and Jun Zhang

MPRA Paper from University Library of Munich, Germany

Abstract: Three striking empirical regularities have been repeatedly reported: the positive correlation between housing prices and trading volume, between housing price and the 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 cost and buyers are endogenously segregated into different submarkets, each with distinct market tightness and prices. With endogenous search effort, 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: D83 E30 R21 (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-dge, nep-mac and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:29127

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