Buyer exuberance and price premium

10.1177/0042098007085966Urban Studies452331-34

Price premium and foreclosure risk

10.1111/j.1540-6229.2006.00165.xReal Estate Economics342211-24

Search and Liquidity in Single-Family Housing

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. Copyright American Real Estate and Urban Economics Association.