Spatial distribution of housing liquidity

Francisco Amaral, Mark Toth and Jonas Zdrzalek

No 2284, Kiel Working Papers from Kiel Institute for the World Economy

Abstract: This paper examines the relationship between location, liquidity, and prices in housing markets. We construct spatial datasets for German and U.S. cities and show that liquidity and prices decline with distance to the city center. To rationalize these patterns, we develop a spatial model of housing search. Location preferences concentrate buyers in central areas, generating tighter markets that are more liquid and command higher prices. Counterfactuals show that increasing search efficiency raises welfare and prices, especially in peripheral areas. Our findings highlight the importance of demand-side preferences and market tightness for understanding liquidity and asset prices.

Keywords: liquidity; housing prices; cities; spatial equilibrium; housing demand; asset pricing (search for similar items in EconPapers)
JEL-codes: G12 G51 R21 R30 (search for similar items in EconPapers)
Date: 2026, Revised 2026
New Economics Papers: this item is included in nep-geo and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:315471

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