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Hedonic analysis with locally weighted regression: An application to the shadow cost of housing regulation in Southern California

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  • Sunding, David L.
  • Swoboda, Aaron M.

Abstract

This paper investigates the role of hedonic model misspecification through inappropriate geographic aggregation in the debate over the effects of housing regulation. We use locally weighted regression (LWR) techniques and geo-referenced data to allow the housing hedonic parameters to vary over space. This modeling strategy better represents micro-market realities and the importance of location as a prime determinant of housing prices. Our results, based on a unique dataset of almost 14,000 single-family home sales between 1993 and 2001 in Southern California, suggest regulation had strong direct impacts on the housing market as suggested by Glaeser and Gyourko (2003) and Cheung et al. (2009a) and not indirectly through increased land scarcity as suggested by Davis and Palumbo (2007).

Suggested Citation

  • Sunding, David L. & Swoboda, Aaron M., 2010. "Hedonic analysis with locally weighted regression: An application to the shadow cost of housing regulation in Southern California," Regional Science and Urban Economics, Elsevier, vol. 40(6), pages 550-573, November.
    • Handle: RePEc:eee:regeco:v:40:y:2010:i:6:p:550-573
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Céline Grislain-Letrémy & Arthur Katossky, 2014. "The Impact of Hazardous Industrial Facilities on Housing Prices : A Comparison of Parametric and Semiparametric Hedonic Price Models," Working Papers 2014-13, Center for Research in Economics and Statistics.
    2. David Christafore & Susane Leguizamon, 2015. "Spatial Spillovers of Land Use Regulation in the United States," Housing Studies, Taylor & Francis Journals, vol. 30(3), pages 491-503, June.
    3. Ross Kendall & Peter Tulip, 2018. "The Effect of Zoning on Housing Prices," RBA Research Discussion Papers rdp2018-03, Reserve Bank of Australia.
    4. Han, Wenjing & Zhang, Xiaoling & Zheng, Xian, 2020. "Land use regulation and urban land value: Evidence from China," Land Use Policy, Elsevier, vol. 92(C).
    5. Ostermeijer, Francis & Koster, Hans RA. & van Ommeren, Jos, 2019. "Residential parking costs and car ownership: Implications for parking policy and automated vehicles," Regional Science and Urban Economics, Elsevier, vol. 77(C), pages 276-288.
    6. Baron, Aneil & Zhang, Wendong & Irwin, Elena, 2016. "Estimating the Capitalization Effects of Harmful Algal Bloom Incidence, Intensity and Duration? A Repeated Sales Model of Lake Erie Lakefront Property Values," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 236589, Agricultural and Applied Economics Association.
    7. Yasin Sunak & Reinhard Madlener, 2017. "The impact of wind farms on property values: A locally weighted hedonic pricing model," Papers in Regional Science, Wiley Blackwell, vol. 96(2), pages 423-444, June.
    8. Jacek Batóg & Iwona Foryś & Radosław Gaca & Michał Głuszak & Jan Konowalczuk, 2019. "Investigating the Impact of Airport Noise and Land Use Restrictions on House Prices: Evidence from Selected Regional Airports in Poland," Sustainability, MDPI, Open Access Journal, vol. 11(2), pages 1-1, January.
    9. C. Grislain-Letrémy & A. Katossky, 2014. "The Impact of Hazardous Industrial Facilities on Housing Prices: A Comparison of Parametric and Semiparametric Hedonic Price Models," Documents de Travail de l'Insee - INSEE Working Papers g2014-05, Institut National de la Statistique et des Etudes Economiques.
    10. Liao, Wen-Chi & Wang, Xizhu, 2012. "Hedonic house prices and spatial quantile regression," Journal of Housing Economics, Elsevier, vol. 21(1), pages 16-27.
    11. Aaron Swoboda & Tsegaye Nega & Maxwell Timm, 2015. "Hedonic Analysis Over Time And Space: The Case Of House Prices And Traffic Noise," Journal of Regional Science, Wiley Blackwell, vol. 55(4), pages 644-670, September.
    12. Lawani, Abdelaziz & Reed, Michael R. & Mark, Tyler & Zheng, Yuqing, 2019. "Reviews and price on online platforms: Evidence from sentiment analysis of Airbnb reviews in Boston," Regional Science and Urban Economics, Elsevier, vol. 75(C), pages 22-34.
    13. David Sunding, 2014. "Conserving Endangered Species through Regulation of Urban Development: The Case of California Vernal Pools," Land Economics, University of Wisconsin Press, vol. 90(2), pages 290-305.
    14. Alan T. K. Wan & Shangyu Xie & Yong Zhou, 2017. "A varying coefficient approach to estimating hedonic housing price functions and their quantiles," Journal of Applied Statistics, Taylor & Francis Journals, vol. 44(11), pages 1979-1999, August.
    15. Koster, Hans R.A. & Rouwendal, Jan, 2013. "Agglomeration, commuting costs, and the internal structure of cities," Regional Science and Urban Economics, Elsevier, vol. 43(2), pages 352-366.
    16. Fernandez, Mario Andres & Bucaram, Santiago, 2019. "The changing face of environmental amenities: Heterogeneity across housing submarkets and time," Land Use Policy, Elsevier, vol. 83(C), pages 449-460.
    17. Simlai, Prodosh, 2014. "Estimation of variance of housing prices using spatial conditional heteroskedasticity (SARCH) model with an application to Boston housing price data," The Quarterly Review of Economics and Finance, Elsevier, vol. 54(1), pages 17-30.
    18. Gluszak, Michal & Zygmunt, Robert, 2018. "Development density, administrative decisions, and land values: An empirical investigation," Land Use Policy, Elsevier, vol. 70(C), pages 153-161.
    19. Grislain-Letrémy, Céline & Katossky, Arthur, 2014. "The impact of hazardous industrial facilities on housing prices: A comparison of parametric and semiparametric hedonic price models," Regional Science and Urban Economics, Elsevier, vol. 49(C), pages 93-107.
    20. Franco, Sofia & Cutter, W. & Lewis, Skyler, 2020. "The Shadow Cost of Parking Minimums: Evidence from Los Angeles County," Economics Department, Working Paper Series 1014, Economics Department, Pomona College, revised 12 Aug 2020.

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