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The Honeycomb Cycle in Real Estate

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Abstract

A change in market conditions can trigger a cyclical response in the housing market, a cycle in both prices and number of transactions. This is caused not only by production lags but also by the reactions of buyers and sellers. The fact that many buyers are also sellers, and vice versa, has a special effect on this cycle. In this paper a theory of this cycle in prices and transactions is developed and empirically tested. It is found that volume changes are much more closely related statistically to changes in market conditions that are price changes. A clear cycle is found in two of the four towns studied.

Suggested Citation

  • Jos Janssen & Bert Kruijt & Barrie Needham, 1994. "The Honeycomb Cycle in Real Estate," Journal of Real Estate Research, American Real Estate Society, vol. 9(2), pages 237-252.
  • Handle: RePEc:jre:issued:v:9:n:2:1994:p:237-252
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    References listed on IDEAS

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    1. John S. Hekman, 1985. "Rental Price Adjustment and Investment in the Office Market," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 13(1), pages 32-47.
    2. Richard Voith & Theodore Crone, 1988. "National Vacancy Rates and the Persistence of Shocks in U.S. Office Markets," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 16(4), pages 437-458.
    3. R Barras, 1983. "A Simple Theoretical Model of the Office-Development Cycle," Environment and Planning A, , vol. 15(10), pages 1381-1394, October.
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    Cited by:

    1. 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.
    2. Jacques Gordon & Paige MosbaughTodd Canter & Todd Canter, 1996. "Integrating Regional Economic Indicators with the Real Estate Cycle," Journal of Real Estate Research, American Real Estate Society, vol. 12(3), pages 469-501.
    3. Gaetano Lisi, 2011. "The Hedonic Price Function in a Matching Model of Housing Market," Economics Bulletin, AccessEcon, vol. 31(3), pages 2347-2355.
    4. Stephen A. Pyhrr & Stephen E. Roulac & Waldo L. Born, 1999. "Real Estate Cycles and Their Strategic Implications for Investors and Portfolio Managers in the Global Economy," Journal of Real Estate Research, American Real Estate Society, vol. 18(1), pages 7-68.
    5. Vincent Renard, 1996. "Quelques caractéristiques des marchés fonciers et immobiliers," Économie et Statistique, Programme National Persée, vol. 294(1), pages 89-97.
    6. I-Chun Tsai, 2012. "Housing Supply, Demand and Price: Construction Cost, Rental Price and House Price Indices," Asian Economic Journal, East Asian Economic Association, vol. 26(4), pages 381-396, December.
    7. Tsai, I-Chun, 2014. "Ripple effect in house prices and trading volume in the UK housing market: New viewpoint and evidence," Economic Modelling, Elsevier, vol. 40(C), pages 68-75.
    8. repec:gam:jijfss:v:6:y:2018:i:1:p:7-:d:125274 is not listed on IDEAS
    9. Jean-Jacques Grannelle, 1996. "Le marché des bureaux. Une revue des modèles économétriques," Revue de l'OFCE, Programme National Persée, vol. 59(1), pages 167-211.

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    JEL classification:

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

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