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Measuring the external benefits of homeownership

  • Coulson, N. Edward
  • Li, Herman

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.

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Article provided by Elsevier in its journal Journal of Urban Economics.

Volume (Year): 77 (2013)
Issue (Month): C ()
Pages: 57-67

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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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