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

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Author Info

  • Charles Ka Yui Leung

    ()
    (Department of Economics and Finance, City University of Hong Kong, Kowloon Tong, Hong Kong)

  • Jun Zhang

    (City University of Hong Kong)

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.

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Bibliographic Info

Article provided by Asian Real Estate Society in its journal International Real Estate Review.

Volume (Year): 14 (2011)
Issue (Month): 3 ()
Pages: 311-329

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Handle: RePEc:ire:issued:v:14:n:03:2011:p:311-329

Contact details of provider:
Postal: Asia Real Estate Society, 51 Monroe Street, Plaza E-6, Rockville, MD 20850, USA
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Web page: http://www.asres.org/

Order Information:
Postal: Asian Real Estate Society, 51 Monroe Street, Plaza E-6, Rockville, MD 20850, USA
Email:
Web: http://www.asres.org/

Related research

Keywords: Housing market; Competitive search; Price dispersion; Trading volume; Time on the market;

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References

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Citations

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Cited by:
  1. Gaetano Lisi, 2012. "Can the Mortensen-Pissarides Model Match the Housing Market Facts ?," Working Papers hal-00676072, HAL.
  2. Lisi, Gaetano, 2012. "Home seekers in the housing market," MPRA Paper 37065, University Library of Munich, Germany.
  3. Gaetano Lisi, 2012. "Matching models and housing markets: the role of the zero-profit condition," EERI Research Paper Series EERI_RP_2012_22, Economics and Econometrics Research Institute (EERI), Brussels.
  4. Lisi, Gaetano, 2012. "On the theoretical derivation of a functional form for the hedonic price function," MPRA Paper 37066, University Library of Munich, Germany.
  5. Lisi, Gaetano, 2012. "Can the Mortensen-Pissarides model match the housing market facts?," MPRA Paper 36769, University Library of Munich, Germany.
  6. Gaetano Lisi & Mauro Iacobini, 2012. "Measuring the Housing Price Dispersion in Italy," Economics Bulletin, AccessEcon, vol. 32(1), pages 811-822.
  7. Leung, Charles Ka Yui & CHEUNG, W. Y. Patrick & TANG, C. H. Edward, 2011. "Financial Crisis and the Comovements of Housing Sub-markets: Do relationships change after a crisis?," MPRA Paper 31627, University Library of Munich, Germany.

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