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Search and Liquidity in Single‐Family Housing

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  • Fred A. Forgey
  • Ronald C. Rutherford
  • Thomas M. Springer

Abstract

A two‐stage least squares model of housing prices is estimated with data collected from 3358 single‐family home transactions. The results provide evidence for an optimal marketing period and indicate that a liquidity premium is priced in single‐family home sales. Consistent with the hypothesis derived from economic search models, the model shows higher selling prices for houses having longer expected marketing periods. The model also shows a price premium for houses that sell faster than expectations. This effect supports the concept that liquidity is a value‐enhancing characteristic.

Suggested Citation

  • Fred A. Forgey & Ronald C. Rutherford & Thomas M. Springer, 1996. "Search and Liquidity in Single‐Family Housing," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 24(3), pages 273-292, September.
    • Handle: RePEc:bla:reesec:v:24:y:1996:i:3:p:273-292
    DOI: 10.1111/1540-6229.00691
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