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Search and Liquidity in Single-Family Housing

Author

Listed:
  • Fred A. Forgey
  • Ronald C. Rutherford
  • Thomas M. Springer

Abstract

A two-stage least squares model of housing prices is estimated with data collected from 3358 single-family home transactions. The results provide evidence for an optimal marketing period and indicate that a liquidity premium is priced in single-family home sales. Consistent with the hypothesis derived from economic search models, the model shows higher selling prices for houses having longer expected marketing periods. The model also shows a price premium for houses that sell faster than expectations. This effect supports the concept that liquidity is a value-enhancing characteristic. Copyright American Real Estate and Urban Economics Association.

Suggested Citation

  • Fred A. Forgey & Ronald C. Rutherford & Thomas M. Springer, 1996. "Search and Liquidity in Single-Family Housing," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 24(3), pages 273-292.
  • Handle: RePEc:bla:reesec:v:24:y:1996:i:3:p:273-292
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