Price Spreads and Residential Housing Market Liquidity

THE JOURNAL OF REAL ESTATE FINANCE AND ECONOMICS, Vol 12 No 1

Posted: 3 Jul 1998

See all articles by G. Donald Jud

G. Donald Jud

University of North Carolina (UNC) at Greensboro - Department of Accounting and Finance

Daniel T. Winkler

University of North Carolina (UNC) at Greensboro - Department of Accounting and Finance

Grace E. Kissling

University of North Carolina

Abstract

Most studies of housing market liquidity have 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 if found to be negatively related to the price spread.

JEL Classification: R0

Suggested Citation

Jud, G. Donald and Winkler, Daniel T. and Kissling, Grace E., Price Spreads and Residential Housing Market Liquidity. THE JOURNAL OF REAL ESTATE FINANCE AND ECONOMICS, Vol 12 No 1. Available at SSRN: https://ssrn.com/abstract=9015

G. Donald Jud (Contact Author)

University of North Carolina (UNC) at Greensboro - Department of Accounting and Finance ( email )

P.O. Box 26165
Greensboro, NC 27412
United States
336-334-3091 (Phone)
336-334-4141 (Fax)

Daniel T. Winkler

University of North Carolina (UNC) at Greensboro - Department of Accounting and Finance ( email )

Greensboro, NC 27412
United States
336-256-0122 (Phone)

Grace E. Kissling

University of North Carolina ( email )

P.O.Box 26170
Greensboro, NC 27412
United States

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