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Agglomeration Effects and Liquidity Gradients in Local Rental Housing Markets

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  • Ruf, Daniel

Abstract

This paper empirically analyzes the relation between local liquidity in rental housing markets and urban agglomeration effects. Using listed rent offers from online market platforms, I study the cross-sectional variation of rental market liquidity. Local liquidity is negatively related to the distance to nearby located urban agglomeration centers, manifesting in a decreasing liquidity gradient. I show that agglomeration externalities expose local rental markets to a systematic liquidity risk. Furthermore, more thinly traded rental markets offer lower capitalization rates for investors.

Suggested Citation

  • Ruf, Daniel, 2017. "Agglomeration Effects and Liquidity Gradients in Local Rental Housing Markets," Working Papers on Finance 1702, University of St. Gallen, School of Finance.
    • Handle: RePEc:usg:sfwpfi:2017:02
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    File URL: http://ux-tauri.unisg.ch/RePEc/usg/sfwpfi/WPF-1702.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Urban Agglomeration Effects; Liquidity; Rental Housing Market;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R40 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - General

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