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Price Adjustment and Liquidity in a Residential Real Estate Market with an Accelerated Information Cascade

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  • Sean P. Salter

    (Middle Tennessee State University)

  • Ernest W. King

    (University of Southern Mississippi)

Abstract

We examine the effect of an unannounced information event, Hurricane Katrina, on the liquidity of the residential real estate market in an area proximately located to the Mississippi Gulf Coast. Using 2SLS and Weibull techniques applied to a unique MLS data set, we test changes in liquidity in a submarkets framework. Results suggest Katrina created submarket effects with respect to the listing and sales periods of our sample and market liquidity was directly influenced by this event. We suggest that this effect was tied to information flow as owners of heavily damaged properties sought new housing in a nearby area.

Suggested Citation

  • Sean P. Salter & Ernest W. King, 2009. "Price Adjustment and Liquidity in a Residential Real Estate Market with an Accelerated Information Cascade," Journal of Real Estate Research, American Real Estate Society, vol. 31(4), pages 421-454.
    • Handle: RePEc:jre:issued:v:31:n:4:2009:p:421-454
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    References listed on IDEAS

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    Cited by:

    1. Jeffrey D. Fisher & Sara R. Rutledge, 2021. "The impact of Hurricanes on the value of commercial real estate," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 56(3), pages 129-145, July.
    2. Christy Siegel & Steven B. Caudill & Franklin G. Mixon, 2013. "Clear skies, dark waters: The Gulf oil spill and the price of coastal condominiums in Alabama," Economics and Business Letters, Oviedo University Press, vol. 2(2), pages 42-53.
    3. Steven B. Caudill & Franklin G. Mixon, 2020. "Estimating Bargaining Power in Real Estate Pricing Models: Conceptual and Empirical Issues," JRFM, MDPI, vol. 13(5), pages 1-8, May.
    4. Justin Contat & William M. Doerner & Robert N. Renner & Malcolm J. Rogers, 2024. "Measuring Price Effects from Disasters using Public Data: A Case Study of Hurricane Ian," FHFA Staff Working Papers 24-04, Federal Housing Finance Agency.

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    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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