NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Thick Market Effect on Housing Markets Transactions

Li Gan, Qinghua Zhang

NBER Working Paper No. 12134
Issued in April 2006
NBER Program(s):   AP

This paper provides a search model for housing market where the number of buyers and/or sellers plays very important role. The model makes three testable predictions: (1) the unemployment rate has a negative impact on the trading volume and the sale prices of the housing market; (2) a larger housing market has a lower average sale price, shorter time-to-sale and smaller price dispersion, in addition to a lower vacancy rate. (3) In a larger housing market, when the unemployment rate goes up (or down), the sale price decreases (or increases) by a smaller percentage than in a smaller market. All three predictions are supported by a panel dataset of the Texas city-level housing markets.

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Document Object Identifier (DOI): 10.3386/w12134

Published: Gan, Li and Qinghua Zhang. “The Thick Market Effect of Local Unemployment Rate Fluctuations.” Journal of Econometrics 133(2006): 127-152.

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