Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/86712
Authors: 
de Wit, Erik R.
Englund, Peter
Francke, Marc
Year of Publication: 
2010
Series/Report no.: 
Tinbergen Institute Discussion Paper 10-039/2
Abstract: 
Housing markets typically exhibit a strong positive correlation between the rate of price increase and the number of houses sold. We document this correlation on high-quality Dutch data for the period 1985-2007, and estimate a VEC-model that allows us to study the mechanism giving rise to the correlation. The data identify the flows of new houses offered for sale as well as the number of houses sold. According to the estimated model, shocks to market fundamentals (the mortgage rate)have an immediate and significant impact on the rate of sale, little impact on the rate of entry of new houses for sale, and a gradual impact on the house prices. This pattern is consistent with a search model where buyers and sellers gradually learn about changes in market conditions.
Subjects: 
price-volume correlation
time-on-the-market
vector error correction model
JEL: 
G12
G21
E29
G17
Document Type: 
Working Paper

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