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Price and Trading Volume in Real Estate Markets

Author

Listed:
  • Ping Cheng
  • Zhenguo Lin
  • Yingchun Liu

Abstract

This study examines the widely documented positive price-volume correlation in the housing market. Unlike some earlier studies that hinge upon the presumption of sellers’ liquidity constraints, we develop a search model in which rational sellers with search costs seek to optimize their selling objectives. We show that the positive price volume correlation at the macro market level is merely the result of individual sellers (rationally) seeking optimal selling outcomes at the micro market level. Our further analysis reveals rich insights into the intricate relationships among housing prices, time-on-market, and trading volume in the housing market. It lends broad theoretical support to a number of prior empirical studies and reconciles some of the conflicting findings.

Suggested Citation

  • Ping Cheng & Zhenguo Lin & Yingchun Liu, 2023. "Price and Trading Volume in Real Estate Markets," ERES eres2023_334, European Real Estate Society (ERES).
    • Handle: RePEc:arz:wpaper:eres2023_334
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    More about this item

    Keywords

    Price; Real Estate Markets; Trading Volume;
    All these keywords.

    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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