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Amenity-Based Housing Affordability Indexes

Author

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  • Lynn M. Fisher
  • Henry O. Pollakowski
  • Jeffrey Zabel

Abstract

The recent slump notwithstanding, substantial increases in house prices in many parts of the United States have served to highlight housing affordability for moderate-income households, especially in high-cost, supply-constrained coastal cities such as Boston. In this article, we develop a new measure of area affordability that characterizes the supply of housing that is affordable to different households in different locations of a metropolitan region. Key to our approach is the explicit recognition that the price/rent of a dwelling is affected by its location. Hence, we develop an affordability methodology that accounts for job accessibility, school quality and safety. This allows us to produce a menu of town-level indexes of adjusted housing affordability. The adjustments are based on obtaining implicit prices of these amenities from a hedonic price equation. We thus use data from a wide variety of sources to rank 141 towns in the greater Boston metropolitan area based on their adjusted affordability. Taking households earning 80% of area median income as an example, we find that consideration of town-level amenities leads to major changes relative to a typical assessment of affordability. Copyright (c) 2009 American Real Estate and Urban Economics Association.

Suggested Citation

  • Lynn M. Fisher & Henry O. Pollakowski & Jeffrey Zabel, 2009. "Amenity-Based Housing Affordability Indexes," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 37(4), pages 705-746.
  • Handle: RePEc:bla:reesec:v:37:y:2009:i:4:p:705-746
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    1. repec:cen:wpaper:13-48 is not listed on IDEAS
    2. Emma Mulliner & Vida Maliene, 2014. "An Analysis of Professional Perceptions of Criteria Contributing to Sustainable Housing Affordability," Sustainability, MDPI, Open Access Journal, vol. 7(1), pages 1-23, December.
    3. repec:ire:issued:v:20:n:03:2017:p:251-286 is not listed on IDEAS
    4. Jordan Rappaport, 2008. "The affordability of homeownership to middle-income Americans," Economic Review, Federal Reserve Bank of Kansas City, issue Q IV, pages 65-95.
    5. Palm, Matthew & Gregor, Brian & Wang, Haizhong & McMullen, B. Starr, 2014. "The trade-offs between population density and households׳ transportation-housing costs," Transport Policy, Elsevier, vol. 36(C), pages 160-172.
    6. Liming Yao & Michael White & Alla Koblyakova, 2015. "House price appreciation and housing affordability: a study of younger households tenure choice in China," ERES eres2015_44, European Real Estate Society (ERES).
    7. Mulliner, Emma & Malys, Naglis & Maliene, Vida, 2016. "Comparative analysis of MCDM methods for the assessment of sustainable housing affordability," Omega, Elsevier, vol. 59(PB), pages 146-156.
    8. Zabel, Jeffrey & Dalton, Maurice, 2011. "The impact of minimum lot size regulations on house prices in Eastern Massachusetts," Regional Science and Urban Economics, Elsevier, vol. 41(6), pages 571-583.
    9. Ritashree Chakrabarti & Junfu Zhang, 2010. "Unaffordable housing and local employment growth," New England Public Policy Center Working Paper 10-3, Federal Reserve Bank of Boston.
    10. Waltert, Fabian & Schläpfer, Felix, 2010. "Landscape amenities and local development: A review of migration, regional economic and hedonic pricing studies," Ecological Economics, Elsevier, vol. 70(2), pages 141-152, December.
    11. Arthur Acolin & Richard K. Green, 2015. "Measuring Housing Adequacy in Sao Paulo Metropolitan Region," Working Paper 9387, USC Lusk Center for Real Estate.
    12. Mulliner, Emma & Smallbone, Kieran & Maliene, Vida, 2013. "An assessment of sustainable housing affordability using a multiple criteria decision making method," Omega, Elsevier, vol. 41(2), pages 270-279.
    13. Mark J. Kutzbach, 2010. "Access to Workers or Employers? An Intra-Urban Analysis of Plant Location Decisions," Working Papers 10-21r, Center for Economic Studies, U.S. Census Bureau, revised Sep 2012.
    14. Zabel, Jeffrey, 2015. "The hedonic model and the housing cycle," Regional Science and Urban Economics, Elsevier, vol. 54(C), pages 74-86.
    15. repec:eee:trapol:v:65:y:2018:i:c:p:89-105 is not listed on IDEAS

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