Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/315471 
Year of Publication: 
2025
Series/Report no.: 
Kiel Working Paper No. 2284
Publisher: 
Kiel Institute for the World Economy (IfW Kiel), Kiel
Abstract: 
This paper examines the relation between location, liquidity, and prices in urban housing markets. We build geospatial datasets for German and U.S. cities and show that housing liquidity and prices jointly decrease with distance to the city center. Using transaction-level data, we estimate a spatial housing search model and show that the cost of travel to the city center determines the joint spatial distribution of housing liquidity and prices. In a counterfactual analysis, we find that frictional illiquidity lowers prices in the outskirts by 7% relative to the city center and explains 19% of the spatial price gradient.
Subjects: 
housing liquidity
housing prices
cities
spatial equilibrium
housing demand
JEL: 
G12
G51
R21
R30
Document Type: 
Working Paper

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