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Measuring the external benefits of homeownership

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  • 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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    Cited by:

    1. Zorlu, Aslan & Mulder, Clara H. & van Gaalen, Ruben, 2014. "Ethnic disparities in the transition to home ownership," Journal of Housing Economics, Elsevier, vol. 26(C), pages 151-163.
    2. Christian A. L. Hilber, 2017. "The Economic Implications of House Price Capitalization: A Synthesis," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 45(2), pages 301-339, April.
    3. Anthony Yezer & Yishen Liu, 2017. "Can Differences Deceive? The Case of “Foreclosure Externalities"," Working Papers 2017-29, The George Washington University, Institute for International Economic Policy.
    4. Hua Kiefer & Leonard Kiefer & Tom Mayock, 2016. "Should we Fear the Shadow? House Prices, Shadow Inventory, and the Nascent Housing Recovery," The Journal of Real Estate Finance and Economics, Springer, vol. 52(3), pages 272-321, April.
    5. Stuart A. Gabriel & Stuart S. Rosenthal, 2015. "The Boom, the Bust and the Future of Homeownership," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 43(2), pages 334-374, June.
    6. John Gathergood & Joerg Weber, 2015. "Is Poor Financial Literacy a Barrier to Home Ownership?," Discussion Papers 2015/16, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).
    7. Kelly, Christina & Gray, Lorraine & Shucksmith, Rachel & Tweddle, Jacqueline F., 2014. "Review and evaluation of marine spatial planning in the Shetland Islands," Marine Policy, Elsevier, vol. 46(C), pages 152-160.
    8. Dag Einar Sommervoll & Jan de Haan, 2014. "Homes and Castles: Should We Care about Idiosyncratic Risk?," Land Economics, University of Wisconsin Press, vol. 90(4), pages 700-716.
    9. repec:eee:juecon:v:99:y:2017:i:c:p:62-78 is not listed on IDEAS
    10. Ambrose, Brent W. & Diop, Moussa, 2014. "Spillover effects of subprime mortgage originations: The effects of single-family mortgage credit expansion on the multifamily rental market," Journal of Urban Economics, Elsevier, vol. 81(C), pages 114-135.
    11. John Gibson & Bonggeun Kim, 2018. "Home Ownership and Political Participation: Longitudinal Evidence Suggests There is No Causal Relationship," Working Papers in Economics 18/02, University of Waikato.
    12. Olsen, Edgar O. & Zabel, Jeffrey E., 2015. "US Housing Policy," Handbook of Regional and Urban Economics, Elsevier.

    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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