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Spatial Distribution of Housing Liquidity

Author

Listed:
  • Francisco Amaral

    (University of Zurich - Department Finance; Swiss Finance Institute)

  • Toth Mark

    (University of Bonn - Department of Economics)

  • Jonas Zdrzalek

    (Kiel Institute for the World Economy - IFW)

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 & Toth Mark & Jonas Zdrzalek, 2026. "Spatial Distribution of Housing Liquidity," Swiss Finance Institute Research Paper Series 26-12, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp2612
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