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Expert opinion versus actual transaction evidence in the valuation of non-market amenities

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  • Cotteleer, Geerte
  • van Kooten, G. Cornelis

Abstract

Actual property values are overwhelmingly employed as a dependent variable in hedonic pricing models. Yet, assessed property values are generally more readily available than actual sales values and have, in some studies, been used in lieu of market prices. In this study, we compare estimates of different non-market amenity values based on actual transactions and assessed values. We estimate a Seemingly Unrelated Regression (SUR) model with two hedonic price equations, one with actual market values as the dependent variable and the other with assessed property values, and compare the resulting estimates of shadow prices for open space amenities. We also take into account spatial autocorrelation and combine Method of Moment estimates of the spatial parameters in both equations to create our test statistic. The results indicate that we cannot accept the hypothesis that the impacts of open space on property values are the same for actual sales and assessed values. Moreover, we do observe some differences between the distributions of assessed versus sales values, although the difference between the sizes of open space effects measured within the two equations is rather limited. Thus, while this one study is insufficient to enable one to draw definitive conclusions, there remains the possibility that policy makers cannot reliably base decisions on amenity values obtained from a hedonic model using assessed values.

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Bibliographic Info

Article provided by Elsevier in its journal Economic Modelling.

Volume (Year): 29 (2012)
Issue (Month): 1 ()
Pages: 32-40

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Handle: RePEc:eee:ecmode:v:29:y:2012:i:1:p:32-40

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Web page: http://www.elsevier.com/locate/inca/30411

Related research

Keywords: Assessed values; Hedonic pricing; Spatial econometrics; GIS; Urban–rural fringe;

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References

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  1. Cho, Seong-Hoon & Bowker, James Michael & Park, William M., 2006. "Measuring the Contribution of Water and Green Space Amenities to Housing Values: An Application and Comparison of Spatially-weighted Hedonic Models," 2006 Annual meeting, July 23-26, Long Beach, CA 21242, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
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Cited by:
  1. Olivier Parent & Rainer Hofe, 2013. "Understanding the impact of trails on residential property values in the presence of spatial dependence," The Annals of Regional Science, Springer, vol. 51(2), pages 355-375, October.

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