SEARCH AND LIQUIDITY IN SINGLE-FAMILY HOUSING

A two-stage least squares model of housing prices is estimated with da ta collected from 3358 single-family home transactions. the results pr ovide evidence for an optimal marketing period and indicate that a liq uidity premium is priced in single-family home sales. Consistent with the hypothesis derived from economic search models, the model shows hi gher selling prices for houses having longer expected marketing period s. The model also shows a price premium for houses that sell faster th an expectations. This effect supports the concept that liquidity is a value-enhancing characteristic.