Prices and Trading Volume in the Housing Market: A Model with Downpayment Effects

44 Pages Posted: 25 Jun 2004 Last revised: 22 Aug 2008

See all articles by Jeremy C. Stein

Jeremy C. Stein

Harvard University - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: March 1993

Abstract

This paper presents a simple model of trade in the housing market. The crucial feature is that a minimum downpayment is required for the purchase of a new home. The model has direct implications for the volatility of house prices, as well as for the correlation between prices and trading volume. The model can also be extended to address the correlation between prices and time-to-sale, as well as certain aspects of the cyclical behavior of housing starts.

Suggested Citation

Stein, Jeremy C., Prices and Trading Volume in the Housing Market: A Model with Downpayment Effects (March 1993). NBER Working Paper No. w4373. Available at SSRN: https://ssrn.com/abstract=418283

Jeremy C. Stein (Contact Author)

Harvard University - Department of Economics ( email )

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HOME PAGE: http://post.economics.harvard.edu/faculty/stein/stein.html

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