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The suburban housing market: effects of city and suburban employment growth

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  • Richard Voith

Abstract

Communities in close proximity to areas of growing employment will experience greater upward housing demand shifts from job growth than more distant communities, but the housing market response will depend on the elasticity of supply, which is likely to differ cross communities. Using a data set of over 88,000 housing sales in suburban Philadelphia, the author finds that city employment growth has a significant positive effect on suburban house values; this effect is largest for housing closest to the central business district and declines with distance from the CBD. City employment growth has a negative effect on the rate of suburban house construction; the magnitude of the negative effect increases with distance. Suburban employment growth has little aggregate effect on house prices, and there is less variation in locations near the urban fringe. With regard to the value of real estate assets, city employment growth has a larger average positive effect on total value, including both price and construction impacts. Suburban homeowners and developers may, however, have divergent interests in the spatial pattern of employment growth, since suburban employment growth adds little to the value of homes in older, fully developed communities.

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Bibliographic Info

Paper provided by Federal Reserve Bank of Philadelphia in its series Working Papers with number 96-15.

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Date of creation: 1996
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Handle: RePEc:fip:fedpwp:96-15

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Keywords: Employment (Economic theory) ; Housing ; Regional economics;

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Cited by:
  1. Richard Voith, 1996. "The suburban housing market: the effects of city and suburban job growth," Business Review, Federal Reserve Bank of Philadelphia, Federal Reserve Bank of Philadelphia, issue Nov, pages 13-25.
  2. Liv Osland & Inge Thorsen, 2009. "Predicting housing prices at alternative locations and under alternative scenarios of the spatial job distribution," Letters in Spatial and Resource Sciences, Springer, Springer, vol. 2(2), pages 133-147, October.
  3. Marion Kohler & Kylie Smith, 2005. "Housing and the Household Wealth Portfolio: The Role of Location," RBA Research Discussion Papers, Reserve Bank of Australia rdp2005-10, Reserve Bank of Australia.
  4. Sofia Dermisi, 2005. "Attracting redevelopment in “inner-ring” municipalities of U.S. metropolitan areas – focusing on Los Angeles and Boston," Urban/Regional, EconWPA 0509008, EconWPA.
  5. Taltavull de La Paz, Paloma, 2000. "Determinant Of Housing Prices In Spanish'S Urban Areas," ERSA conference papers, European Regional Science Association ersa00p258, European Regional Science Association.
  6. Osland, Liv & Thorsen, Inge, 2007. "Predicting housing prices at alternative locations and in alternative scenarios of the spatial job distribution," Working Papers in Economics, University of Bergen, Department of Economics 16/07, University of Bergen, Department of Economics.
  7. Baum-Snow, Nathaniel & Kahn, Matthew E., 2000. "The effects of new public projects to expand urban rail transit," Journal of Public Economics, Elsevier, Elsevier, vol. 77(2), pages 241-263, August.
  8. Elio H Londero, 2004. "Measuring Benefits, Tracing Distributional Effects, and Affecting Distributional Outcomes," Public Economics, EconWPA 0407011, EconWPA.
  9. Joseph Gyourko & Richard Voith, 1997. "Does the U.S. tax treatment of housing promote suburbanization and central city decline?," Working Papers, Federal Reserve Bank of Philadelphia 97-13, Federal Reserve Bank of Philadelphia.

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