Spatial distribution of housing liquidity

This paper examines the relationship between location, liquidity, and prices in housing mar-kets. We construct spatial datasets for German and U.S. cities and show that liquidity and pric-es decline with distance to the city center. To rationalize these patterns, we develop a spatial model of housing search. Location preferences concentrate buyers in central areas, generating tighter markets that are more liquid and command higher prices. Counterfactuals show that increasing search efficiency raises welfare and prices, especially in peripheral areas. Our find-ings highlight the importance of demand-side preferences and market tightness for understand-ing liquidity and asset prices.

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