Rationalizing the Higher Demand for Safety Embedded on Specific Dwelling Characteristics: The Case of Monterrey, Mexico between 2003 and 2015

Using data on new houses for sale from the second most important metropolitan area in Mexico, the main aim of this paper is to quantify how much money individuals spend in two specific security characteristics when purchasing a new house: whether the property is fenced or has a security booth. For this purpose, the paper uses a hedonic regression to decompose the price of a house in implicit prices of its characteristics and security devices attached to it. Preliminary results indicate that, dwellings in real estate developments with security booth are valued more and the effect is statistically significant for most periods between the second quarter of 2005 and the second quarter of 2011. When dividing the sample in low-income and high-income real estate developments, this effect is still positive and significant although for different periods: i) between the first quarter of 2003 and the third quarter of 2009 for low-income dwellings, and ii) between the second quarter of 2009 and the first quarter of 2011 for highincome dwellings. These results show that, although it is true that for highincome dwellings the quarters where the price of a security booth is positive and significant coincide with the upsurge in homicides registered in Monterrey between 2009 and 2011, low-income families were already paying higher prices for security booths before those years. Finally, the effect on house prices for dwellings within fenced real estate developments are not statistically significant.