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Interjurisdictional Housing Prices and Spatial Amenities: Which Measures of Housing Prices Reflect Local Public Goods?

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  • H. Spencer Banzhaf
  • Omar Farooque

Abstract

Understanding the spatial variation in housing prices plays a crucial role in topics ranging from the cost of living to quality-of-life indices to studies of public goods and household mobility. Yet analysts have not reached a consensus on the best source of such data, variously using self-reported values from the census, transactions values, tax assessments, and rental values. Additionally, while most studies use micro-level data, some have used summary statistics such as the median housing value. Assessing neighborhood price indices in Los Angeles, we find that indices based on transactions prices are highly correlated with indices based on self-reported values, but the former are better correlated with public goods. Moreover, rental values have a higher correlation with public goods and income levels than either asset-value measure. Finally, indices based on median values are poorly correlated with the other indices, public goods, and income.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 17809.

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Date of creation: Feb 2012
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Publication status: published as Banzhaf, H. Spencer & Farooque, Omar, 2013. "Interjurisdictional housing prices and spatial amenities: Which measures of housing prices reflect local public goods?," Regional Science and Urban Economics, Elsevier, vol. 43(4), pages 635-648.
Handle: RePEc:nbr:nberwo:17809

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Cited by:
  1. Mika Kortelainen & Tuukka Saarimaa, 2012. "Do Homeowners Benefit Urban Neighborhoods? Evidence from Housing Prices," SERC Discussion Papers, Spatial Economics Research Centre, LSE 0110, Spatial Economics Research Centre, LSE.
  2. Winters, John V, 2010. "Differences in Quality of Life Estimates Using Rents and Home Values," MPRA Paper 22455, University Library of Munich, Germany.
  3. Christoph Basten & Maximilian von Ehrlich & Andrea Lassmann, 2014. "Income Taxes, Sorting, and the Costs of Housing: Evidence from Municipal Boundaries in Switzerland," CESifo Working Paper Series 4896, CESifo Group Munich.

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