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Housing Submarkets and the Lattice of Substitution

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  • Gwilym Pryce

Abstract

This paper aims to stimulate interest in the early micro-economic conceptualisation of housing submarkets proposed by Rapkin and Grigsby, which defined market areas in terms of dwelling substitutability. Three key questions need to be addressed if a return to the Rapkin–Grigsby approach is to be achievable and worthwhile. First, what are the practical benefits? (The paper highlights a range of potential research applications that would benefit from the substitutability approach.) Secondly, in what way are existing approaches likely to be inadequate for demarcating substitutability-based submarkets? (Four criteria are proposed for assessing submarket estimation methods which existing approaches fail to satisfy.) Thirdly, what are the prospects for developing a substitutability metric that will make the Rapkin–Grigsby definition empirically feasible? (A new measure is proposed, based on the cross-price elasticity of price (CPEP), which is illustrated using data for Glasgow, Scotland.)

Suggested Citation

  • Gwilym Pryce, 2013. "Housing Submarkets and the Lattice of Substitution," Urban Studies, Urban Studies Journal Limited, vol. 50(13), pages 2682-2699, October.
    • Handle: RePEc:sae:urbstu:v:50:y:2013:i:13:p:2682-2699
    DOI: 10.1177/0042098013482502
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    2. Berna Keskin & Craig Watkins, 2017. "Defining spatial housing submarkets: Exploring the case for expert delineated boundaries," Urban Studies, Urban Studies Journal Limited, vol. 54(6), pages 1446-1462, May.
    3. Charles-Olivier Amédée-Manesme & Michel Baroni & Fabrice Barthélémy & Francois des Rosiers, 2017. "Market heterogeneity and the determinants of Paris apartment prices: A quantile regression approach," Urban Studies, Urban Studies Journal Limited, vol. 54(14), pages 3260-3280, November.
    4. Hozer Józef & Gnat Sebastian & Kokot Sebastian & Kuźmiński Wojciech, 2019. "The Problem of Designating Elementary Terrains for the Purpose of Szczecin Algorithm of Real Estate Mass Appraisal," Real Estate Management and Valuation, Sciendo, vol. 27(3), pages 42-58, September.
    5. Michael Beenstock, 2019. "Correlated shocks may reduce outcome correlations when outcomes are endogenous: a new paradox," Economics Bulletin, AccessEcon, vol. 39(2), pages 1651-1655.
    6. Sommervoll, Åvald & Sommervoll, Dag Einar, 2019. "Learning from man or machine: Spatial fixed effects in urban econometrics," Regional Science and Urban Economics, Elsevier, vol. 77(C), pages 239-252.
    7. Usman Hamza & Lizam Mohd & Adekunle Muhammad Usman, 2020. "Property Price Modelling, Market Segmentation and Submarket Classifications: A Review," Real Estate Management and Valuation, Sciendo, vol. 28(3), pages 24-35, September.
    8. Arnab Bhattacharjee & Eduardo Castro & Taps Maiti & João Marques, 2014. "Endogenous spatial structure and delineation of submarkets: A new framework with application to housing markets," SEEC Discussion Papers 1403, Spatial Economics and Econometrics Centre, Heriot Watt University.
    9. Nema Dean & Gwilym Pryce, 2017. "Is the housing market blind to religion? A perceived substitutability approach to homophily and social integration," Urban Studies, Urban Studies Journal Limited, vol. 54(13), pages 3058-3070, October.
    10. Arnab Bhattacharjee & Liqian Cai & Taps Maiti, 2013. "Functional regression over irregular domains," SEEC Discussion Papers 1301, Spatial Economics and Econometrics Centre, Heriot Watt University.

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