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Spatial Distribution of Housing Liquidity

Author

Listed:
  • Francisco Amaral

  • Mark Toth

  • Jonas Zdrzalek

Abstract

This paper examines the relationship between location, liquidity, and prices in housing markets. We construct spatial datasets for German and U.S. cities and show that liquidity and prices decline with distance to the city center. To rationalize these patterns, we develop a spatial model of housing search. Location preferences concentrate buyers in central areas, generating tighter markets that are more liquid and command higher prices. Counterfactuals show that increasing search efficiency raises welfare and prices, especially in peripheral areas. Our findings highlight the importance of demand-side preferences and market tightness for understanding liquidity and asset prices

Suggested Citation

  • Francisco Amaral & Mark Toth & Jonas Zdrzalek, 2026. "Spatial Distribution of Housing Liquidity," CRC TR 224 Discussion Paper Series crctr224_2025_727, University of Bonn and University of Mannheim, Germany.
    • Handle: RePEc:bon:boncrc:crctr224_2025_727
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    File URL: https://www.crctr224.de/research/discussion-papers/archive/dp727
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    References listed on IDEAS

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    1. Krainer, John, 2001. "A Theory of Liquidity in Residential Real Estate Markets," Journal of Urban Economics, Elsevier, vol. 49(1), pages 32-53, January.
    2. John R. Knight, 2002. "Listing Price, Time on Market, and Ultimate Selling Price: Causes and Effects of Listing Price Changes," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 30(2), pages 213-237.
    3. Paul E. Carrillo, 2012. "An Empirical Stationary Equilibrium Search Model Of The Housing Market," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 53(1), pages 203-234, February.
    4. Gupta, Arpit & Mittal, Vrinda & Peeters, Jonas & Van Nieuwerburgh, Stijn, 2022. "Flattening the curve: Pandemic-Induced revaluation of urban real estate," Journal of Financial Economics, Elsevier, vol. 146(2), pages 594-636.
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    Keywords

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    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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