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

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  • Leung, Charles Ka Yui
  • Zhang, Jun

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.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 29127.

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Date of creation: 2011
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Handle: RePEc:pra:mprapa:29127

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Keywords: housing market; competitive search; price dispersion; trading volume; time on the market;

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References

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Cited by:
  1. Lisi, Gaetano, 2011. "Price dispersion in the housing market: the role of bargaining and search costs," MPRA Paper 33863, University Library of Munich, Germany.
  2. Gaetano Lisi, 2014. "Home-seekers in the Housing Market," International Real Estate Review, Asian Real Estate Society, Asian Real Estate Society, vol. 17(1), pages 47-62.

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