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Explaining Intermetropolitan Variation in Housing Prices, Rents and Land Prices

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  • Michael J. Potepan

Abstract

In attempting to explain why housing prices, rents and urban land prices vary so dramatically between U.S. metropolitan areas, a simple model of a metropolitan housing market is presented identifying three interrelated submarkets. Estimating equations for rent, housing prices and urban land prices are identified and estimated using two-stage least squares. The empirical results provide strong support for the theoretical model concerning how these three submarkets interact. The results also suggest that household income and construction costs are the most important factors causing housing prices, rents and land prices to vary between metropolitan areas. Copyright American Real Estate and Urban Economics Association.

Suggested Citation

  • Michael J. Potepan, 1996. "Explaining Intermetropolitan Variation in Housing Prices, Rents and Land Prices," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 24(2), pages 219-245.
  • Handle: RePEc:bla:reesec:v:24:y:1996:i:2:p:219-245
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    Citations

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    Cited by:

    1. Du, Hongyan & Ma, Yongkai & An, Yunbi, 2011. "The impact of land policy on the relation between housing and land prices: Evidence from China," The Quarterly Review of Economics and Finance, Elsevier, vol. 51(1), pages 19-27, February.
    2. Andreas Mense, 2016. "The Value of Energy Efficiency and the Role of Expected Heating Costs," ERES eres2016_153, European Real Estate Society (ERES).
    3. Wu, Guiying Laura & Feng, Qu & Li, Pei, 2015. "Does local governments’ budget deficit push up housing prices in China?," China Economic Review, Elsevier, vol. 35(C), pages 183-196.
    4. Bischoff, Oliver, 2012. "Explaining regional variation in equilibrium real estate prices and income," Journal of Housing Economics, Elsevier, vol. 21(1), pages 1-15.
    5. repec:gam:jsusta:v:9:y:2017:i:11:p:2050-:d:118040 is not listed on IDEAS
    6. Taltavull de La Paz, Paloma, 2000. "Determinant Of Housing Prices In Spanish'S Urban Areas," ERSA conference papers ersa00p258, European Regional Science Association.
    7. Rena Sivitanidou, 1999. "Office Rent Processes: The Case of U.S. Metropolitan Markets," Working Paper 8664, USC Lusk Center for Real Estate.
    8. Jarl G. Kallberg & Crocker H. Liu & Paolo Pasquariello, 2014. "On the Price Comovement of U.S. Residential Real Estate Markets," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 42(1), pages 71-108, March.
    9. Changrong Deng & Yongkai Ma & Yao-Min Chiang, 2009. "The Dynamic Behavior of Chinese Housing Prices," International Real Estate Review, Asian Real Estate Society, vol. 12(2), pages 121-134.
    10. Tom Kauko & Roland Goetgeluk, 2005. "Spatial and multidimensional analysis of the Dutch housing market using the Kohonen Map and GIS," ERSA conference papers ersa05p91, European Regional Science Association.
    11. Yunlong Gong & Peter Boelhouwer & Jan de Haan, 2016. "Interurban house price gradient: Effect of urban hierarchy distance on house prices," Urban Studies, Urban Studies Journal Limited, vol. 53(15), pages 3317-3335, November.
    12. Benedetto Manganelli & Francesco Tajani, 2015. "Macroeconomic Variables and Real Estate in Italy and in the usa," SCIENZE REGIONALI, FrancoAngeli Editore, vol. 2015(3), pages 31-48.
    13. Chang, Chuang-Chang & Chao, Ching-Hsiang & Yeh, Jin-Huei, 2016. "The role of buy-side anchoring bias: Evidence from the real estate market," Pacific-Basin Finance Journal, Elsevier, vol. 38(C), pages 34-58.
    14. Wu, JunJie, 2014. "Public open-space conservation under a budget constraint," Journal of Public Economics, Elsevier, vol. 111(C), pages 96-101.
    15. J. Phillips & E. Goodstein, 2000. "Growth management and housing prices: the case of Portland, Oregon," Contemporary Economic Policy, Western Economic Association International, vol. 18(3), pages 334-344, July.

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