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Putting time into space: the temporal coherence of spatial applications in the housing market

Author

Listed:
  • Sotirios Thanos
  • Jean Dubé
  • Diego Legros

    (LEDi - Laboratoire d'Economie de Dijon - UB - Université de Bourgogne - CNRS - Centre National de la Recherche Scientifique)

Abstract

Relationships between past events, future expectations and present decisions, typically examined through a temporal prism within applied economics, have been lately moving to the spatial dimension through spatial econometrics. However, violations of the "arrow of time", and thus causality, have been identified in spatial econometric techniques applied to spatio-temporal data consisting of observations each at a specific location and distinct moment in time. A comprehensive review classifies for the first time several redresses to this issue in a currently fragmented literature. This paper puts back the temporal dimension into spatial Hedonic Pricing models through a unique specification of a spatio-temporal model that successfully isolates three distinct effects. First, past sale prices affecting current prices, which exemplifies the "sales comparison" approach. Second, a contemporaneous peer effect that is occurring within the narrow time frame of interaction between market participants prior to a sale. Third, the signals of sellers' expectations are captured in the asking prices of other houses not yet sold, while the buyer is active in the market. This affects the final sale price, due to strategic behavior and anchoring. This is the first instance that effects other than the own asking price can be handled in such models. In "boom" market conditions, this mechanism introduces the expectation of increasing prices to the hedonic price function, potentially contributing to housing market "bubble" propagation.

Suggested Citation

  • Sotirios Thanos & Jean Dubé & Diego Legros, 2016. "Putting time into space: the temporal coherence of spatial applications in the housing market," Post-Print hal-01338641, HAL.
  • Handle: RePEc:hal:journl:hal-01338641
    DOI: 10.1016/j.regsciurbeco.2016.03.001
    Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-01338641
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    References listed on IDEAS

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    Cited by:

    1. Filippova, Olga & Sheng, Mingyue, 2020. "Impact of bus rapid transit on residential property prices in Auckland, New Zealand," Journal of Transport Geography, Elsevier, vol. 86(C).
    2. Rahal, Charles, 2019. "A Grid Based Approach to Analysing Spatial Weighting Matrix Specification," SocArXiv nt2yq, Center for Open Science.
    3. Weida Kuang & Qilin Wang, 2018. "Cultural similarities and housing market linkage: evidence from OECD countries," Frontiers of Business Research in China, Springer, vol. 12(1), pages 1-25, December.
    4. Török, Ádám & Konka, Boglárka, 2019. "Eukleidész és a magyar regionális fejlődés. Válaszcikk Lengyel Imre-Varga Attila tanulmányára és kutatási javaslatok [Euclid and Hungarian regional development. A response to the study of Imre Leng," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(6), pages 713-722.
    5. Dubé, Jean & Legros, Diègo & Devaux, Nicolas, 2018. "From bus to tramway: Is there an economic impact of substituting a rapid mass transit system? An empirical investigation accounting for anticipation effect," Transportation Research Part A: Policy and Practice, Elsevier, vol. 110(C), pages 73-87.
    6. Sotirios Thanos & Maria Kamargianni & Andreas Schäfer, 2018. "Car Travel Demand: Spillovers and Asymmetric Price Effects in a Spatial Setting," Transportation Science, INFORMS, vol. 52(3), pages 621-636, June.
    7. Sonia Yousfi & Jean Dubé & Diègo Legros & Sotirios Thanos, 2020. "Mass appraisal without statistical estimation: a simplified comparable sales approach based on a spatiotemporal matrix," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 64(2), pages 349-365, April.
    8. Arlan Brucal & John Lynham, 0. "Coastal armoring and sinking property values: the case of seawalls in California," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 0, pages 1-23.
    9. Hyun, Dongwoo & Milcheva, Stanimira, 2019. "Spatio-temporal effects of an urban development announcement and its cancellation on house prices: A quasi-natural experiment," Journal of Housing Economics, Elsevier, vol. 43(C), pages 23-36.
    10. Ilir Nase & Nick van Assendelft & Hilde Remøy, 2019. "Rent Premiums and Vertical Sorting in Amsterdam’s Multi-Tenant Office Buildings," The Journal of Real Estate Finance and Economics, Springer, vol. 59(3), pages 419-460, October.
    11. Xiaojun Dong & Tao Shi & Wei Zhang & Qian Zhou, 2020. "Temporal and Spatial Differences in the Resilience of Smart Cities and Their Influencing Factors: Evidence from Non-Provincial Cities in China," Sustainability, MDPI, Open Access Journal, vol. 12(4), pages 1-15, February.
    12. Chiara D’Alpaos & Paolo Bragolusi, 2020. "The Market Price Premium for Buildings Seismic Retrofitting," Sustainability, MDPI, Open Access Journal, vol. 12(21), pages 1-20, October.
    13. Hyun, Dongwoo & Milcheva, Stanimira, 2018. "Spatial dependence in apartment transaction prices during boom and bust," Regional Science and Urban Economics, Elsevier, vol. 68(C), pages 36-45.

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