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

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  • 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.

Suggested Citation

  • Charles Ka Yui Leung & Jun Zhang, 2011. "¡§Fire Sales¡¨ in Housing Market: Is the House- Search Process Similar to a Theme Park Visit?," International Real Estate Review, Asian Real Estate Society, vol. 14(3), pages 311-329.
  • Handle: RePEc:ire:issued:v:14:n:03:2011:p:311-329
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Gaetano Lisi, 2014. "Home-seekers in the Housing Market," International Real Estate Review, Asian Real Estate Society, vol. 17(1), pages 47-62.
    2. Charles Ka Yui Leung & Patrick Wai Yin Cheung & Edward Chi Ho Tang, 2013. "Financial Crisis and the Co-movements of Housing Sub-markets: Do relationships change after a crisis?," International Real Estate Review, Asian Real Estate Society, vol. 16(1), pages 68-118.
    3. Gaetano Lisi, 2013. "Can the Mortensen-Pissarides Model Match the Housing Market Facts?," Journal of Economics and Econometrics, Economics and Econometrics Society, vol. 56(2), pages 78-92.
    4. Leung, Charles Ka Yui & Tse, Chung-Yi, 2017. "Flipping in the housing market," Journal of Economic Dynamics and Control, Elsevier, vol. 76(C), pages 232-263.
    5. Huang, Daisy J. & Leung, Charles Ka Yui & Tse, Chung-Yi, 2017. "What account for the differences in rent-price ratio and turnover rate? A search-and-matching approach," MPRA Paper 76864, University Library of Munich, Germany.
    6. Gaetano Lisi, 2013. "Matching Models and Housing Markets: the Role of the Zero-Profit Condition," Economic Research Guardian, Weissberg Publishing, vol. 3(1), pages 54-60, June.
    7. Gaetano Lisi, 2012. "Can the Mortensen-Pissarides Model Match the Housing Market Facts ?," Working Papers hal-00676072, HAL.
    8. Lisi, Gaetano, 2013. "Equilibrium Dynamics in a Matching Theoretic-Model of the Housing Market," MPRA Paper 62317, University Library of Munich, Germany.
    9. Gaetano Lisi & Mauro Iacobini, 2012. "Measuring the Housing Price Dispersion in Italy," Economics Bulletin, AccessEcon, vol. 32(1), pages 811-822.
    10. Gaetano Lisi & Mauro Iacobini, 2013. "Real estate appraisals, hedonic models and the measurement of house price dispersion," Journal of Economics and Econometrics, Economics and Econometrics Society, vol. 56(1), pages 61-73.
    11. Leung, Charles Ka Yui & Tse, Chung-Yi, 2017. "Flipping the Housing Market," Globalization and Monetary Policy Institute Working Paper 301, Federal Reserve Bank of Dallas.
    12. Lisi, Gaetano, 2012. "On the theoretical derivation of a functional form for the hedonic price function," MPRA Paper 37066, University Library of Munich, Germany.

    More about this item

    Keywords

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

    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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