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Accessibility Dynamics and Location Premia: Do Land Values Follow Accessibility Changes?

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Abstract

The structure of transportation networks and the patterns of accessibility they give rise to are an important determinant of land prices, and hence urban spatial structure. While there is ample evidence on the cross-sectional relationship between location and land value (usually measured from the value of improved property), there is much less evidence available on the changes in this relationship over time, especially where location is represented using a disaggregate measure of urban accessibility. This paper provides evidence of this dynamic relationship using data on home sales in the Minneapolis-St Paul, MN, USA metropolitan area, coupled with disaggregate measures of urban accessibility for multiple modes, for the period from 2000 to 2005. Our investigation tracks the effects of marginal changes in accessibility over time, as opposed to static, cross- sectional relationships, by using an approach in which the unit of observation is a ‘representative house’ for each transportation analysis zone in the region. This approach allows us to control for changes in structural attributes of houses over time, while also isolating the effect of changes in accessibility levels. Results of this approach are compared with a cross-sectional model using the same variables for a single year to illustrate important differences. Empirical estimates indicate that while most of the models estimated using a cross-sectional specification yield positive and significant effects of accessibility on sale prices, these effects disappear when the models are transformed into first-difference form. We explain these findings in light of the state of maturity of urban transportation networks.

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  • Michael Iacono & David Levinson, 2011. "Accessibility Dynamics and Location Premia: Do Land Values Follow Accessibility Changes?," Working Papers 000087, University of Minnesota: Nexus Research Group.
  • Handle: RePEc:nex:wpaper:accessdynamics
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    File URL: http://hdl.handle.net/11299/180069
    File Function: First version, 2011
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    Keywords

    accessibility; land value; transportation – economics; urban dynamics; urban structure;

    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy
    • R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations
    • R53 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Public Facility Location Analysis; Public Investment and Capital Stock
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government

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