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Measuring the external benefits of homeownership

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Listed:
  • Coulson, N. Edward
  • Li, Herman

Abstract

The subsidization of homeownership is justified on efficiency grounds only to the extent that it provides benefits to people other than the homeowner. We use the clustered neighborhoods subsample in the American Housing Survey to measure that benefit in the form of higher housing prices in neighborhoods with higher ownership rates (and lower vacancies). We attempt to account for unobservable neighborhood and house attributes that may be correlated with occupancy and ownership through instrumental variables, switching regressions and panel methods. Estimates indicate that a housing transition from renting to owning creates approximately $1300 in measured benefits.

Suggested Citation

  • Coulson, N. Edward & Li, Herman, 2013. "Measuring the external benefits of homeownership," Journal of Urban Economics, Elsevier, vol. 77(C), pages 57-67.
    • Handle: RePEc:eee:juecon:v:77:y:2013:i:c:p:57-67
    DOI: 10.1016/j.jue.2013.03.005
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    More about this item

    Keywords

    Homeownership; External effects;

    JEL classification:

    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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