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On the Relation between Local Amenities and House Price Dynamics

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  • Eli Beracha
  • Ben T Gilbert
  • Tyler Kjorstad
  • Kiplan Womack

Abstract

This study explores the extent to which local amenities are related to house price volatility, returns and risk‐adjusted returns across 238 MSAs. We find strong evidence that high amenity areas experience greater price volatility. In regards to returns, high amenity areas experience greater (lower) real returns in appreciating (depreciating) markets. However, high amenity areas experience little to no abnormal risk‐adjusted returns. Results from the study are robust to an endogenous treatment of amenities and land supply elasticity. Overall, we conclude that the desirability of a metropolitan area is a significant channel through which land values drive house price dynamics.

Suggested Citation

  • Eli Beracha & Ben T Gilbert & Tyler Kjorstad & Kiplan Womack, 2018. "On the Relation between Local Amenities and House Price Dynamics," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 46(3), pages 612-654, September.
    • Handle: RePEc:bla:reesec:v:46:y:2018:i:3:p:612-654
    DOI: 10.1111/1540-6229.12170
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    Cited by:

    1. Faten Ben Bouheni & Manish Tewari, 2023. "Common risk factors and risk–return trade-off for REITs and treasuries," Journal of Asset Management, Palgrave Macmillan, vol. 24(5), pages 374-395, September.
    2. Zhengyuan Chai & Yi Yang & Yangyang Zhao & Yonghu Fu & Ling Hao, 2021. "Exploring the Effects of Contextual Factors on Residential Land Prices Using an Extended Geographically and Temporally Weighted Regression Model," Land, MDPI, vol. 10(11), pages 1-20, October.
    3. Songlin Zhang & Haoqing Zheng & Hongyong Zhou & Qing Shao & Qun Wu, 2021. "Sustainable land urbanization, urban amenities, and population urbanization: Evidence from city‐level data in China," Social Science Quarterly, Southwestern Social Science Association, vol. 102(4), pages 1686-1698, July.
    4. Brent W. Ambrose & Moussa Diop, 2021. "Information Asymmetry, Regulations and Equilibrium Outcomes: Theory and Evidence from the Housing Rental Market," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 49(S1), pages 74-110, March.
    5. Aviad Tur-Sinai, 2019. "Is a Municipal Boundary a Good Stratification Variable?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 144(3), pages 1075-1098, August.
    6. Lei Zhang & Tammy Leonard, 2021. "External validity of hedonic price estimates: Heterogeneity in the price discount associated with having Black and Hispanic neighbors," Journal of Regional Science, Wiley Blackwell, vol. 61(1), pages 62-85, January.

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