Price Spreads and Residential Housing Market Liquidity

UNCG Author/Contributor (non-UNCG co-authors, if there are any, appear on document)
Gustav D. Jud, Retired (Creator)
Daniel T. Winkler, Professor (Creator)
The University of North Carolina at Greensboro (UNCG )
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Abstract: Most studies of housing market liquidity twee measured liquidity in terms of time on the market (TOM), and have sought to explain TOM in terms of property characteristics and measures of market conditions. This paper departs from past studies of housing market liquidity by examining the spread between the listing and contract prices. We develop theory to explain the price spreads in the residential housing market. The model includes the list price of the home, the cost of the search, the standard deviation of offer prices, and TOM. Empirical tests using 3,597 sales for 25 months show a robust relationship of housing market spreads and these variables. Listing price and cost of search have the predicted positive coefficients, and the standard deviation of price offers is found to be negatively related to the price spread.

Additional Information

Journal of Real Estate Finance and Economics, vol. 11, no. 3, 1995, pp. 251-260.
Language: English
Date: 1995
Housing price spread, Housing market liquidity, Housing bid-ask spread, Time on the market, Housing sequential search

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