“Fire Sales” in Housing Market : Is the HouseSearch Process Similar to a Theme Park Visit?

Research output: Journal Publications and ReviewsRGC 21 - Publication in refereed journalpeer-review

14 Scopus Citations
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Detail(s)

Original languageEnglish
Pages (from-to)311-329
Journal / PublicationInternational Real Estate Review
Volume14
Issue number3
Publication statusPublished - 1 Dec 2011

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.

Research Area(s)

  • Competitive search, Housing market, Price dispersion, Time on the market, Trading volume

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