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Article: "Fire Sales" in Housing Market: Is the House- Search Process Similar to a Theme Park Visit? Author: Charles Ka Yui Leung, Jun Zhang Start Page: 311 Abstract: Three striking empirical regularities have been repeatedly reported: the positive correlation between housing prices and trading volume, and between housing price and time-on-the-market (TOM), and the existence of price dispersion. This short paper provides perhaps the first unifying framework which mimics these phenomena in a simple competitive search framework. In the equilibrium, sellers with heterogeneous waiting costs and buyers are endogenously segregated into different submarkets, each with distinct market tightness and prices. With endogenous search efforts, our model also reproduces the well-documented price-volume correlation. Directions for future research are also discussed. Keywords Housing market; Competitive search; Price dispersion; Trading volume; Time on the market
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