Abstract
Housing markets clear partly through the time buyers and sellers spend on the market, and the readiness with which they transact with each other. Applying a random matching model to unique multi-year, multi-market survey data on both buyers and sellers, we examine how demand affects housing market liquidity. We find that buyer time on the market, the number of homes buyers visit, and especially seller time on the market all decrease with demand, with a much greater sensitivity to demand growth than its level. This is consistent with a straightforward matching model with a lag in seller response. Our findings imply that the elasticity of the hazard that any given seller will be contacted by a buyer, with respect to the buyer-seller ratio, is 0.84, assuming a constant returns to scale matching function.
| Original language | English |
|---|---|
| Pages (from-to) | 31-45 |
| Number of pages | 15 |
| Journal | Journal of Urban Economics |
| Volume | 72 |
| Issue number | 1 |
| DOIs | |
| State | Published - Jul 2012 |
Bibliographical note
Funding Information:We thank the Social Sciences and Humanities Research Council of Canada for financial support. We are also grateful to Ed Baryla, Paul Bishop, Glenn Crellin, Harold Elder, and Len Zumpano for generously providing us with data, codebooks and questionnaires; Travis Chow for excellent research assistance; and the editor Stuart Rosenthal, anonymous referees, Paul Anglin, Carlos Garriga, Shouyong Shi, and other seminar participants at Ben-Gurion, Duke, Guelph, Hebrew University, Madison-Wisconsin, Toronto and UBC for their helpful comments.
Keywords
- Liquidity
- Matching
- Real estate
- Search
