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The Dynamics of House Price Capitalization and Locational Sorting: Evidence from Air Quality Changes

  • Corey Lang
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    Despite extensive use of housing data to reveal valuation of non-market goods, the process of house price capitalization remains vague. Using the restricted access American Housing Survey, a high-frequency panel of prices, turnover, and occupant characteristics, this paper examines the time path of capitalization and preference-based sorting in response to air quality changes caused by differential regulatory pressure from the 1990 Clean Air Act Amendments. The results demonstrate that owner-occupied units capitalize changes immediately, whereas rent capitalization lags. The delayed but sharp rent capitalization temporally coincides with evidence of sorting, suggesting a strong link between location choices and price dynamics.

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    File URL: ftp://ftp2.census.gov/ces/wp/2012/CES-WP-12-22.pdf
    File Function: First version, 2012
    Download Restriction: no

    Paper provided by Center for Economic Studies, U.S. Census Bureau in its series Working Papers with number 12-22.

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    Length: 35 pages
    Date of creation: Sep 2012
    Date of revision:
    Handle: RePEc:cen:wpaper:12-22
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