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Interactive Property Valuations

  • Yannis Ioannides

    ()

This paper develops a model of housing decisions which allows for social interactions within residential neighborhoods to impact homeowners' valuation of their own properties. The model is used to structure an empirical investigation with data from the American Housing Survey for 1985 and 1989. It explores in great detail a relatively neglected feature of the data, namely the availability of data of neighborhood clusters for standard metropolitan areas in the United States. This feature of the data allows us to model empirically the effects of social interactions at the immediate residential neighborhood level, with neighborhoods consisting of a dwelling unit and its ten nearest neighbors. Most previous work on neighborhoods has used contextual information associated with the census tract where a unit of observation belongs. It identifies the effect of endogenous social interactions and find that the impact of social interactions is much more important then the dynamic (autoregressive) structure of the model when both variables are present (but both are significant). The findings provide empirical support for the notion, common in the real estate world, of the importance of neighborhood characteristics in property valuations.

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File URL: http://ase.tufts.edu/econ/papers/200102.pdf
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Paper provided by Department of Economics, Tufts University in its series Discussion Papers Series, Department of Economics, Tufts University with number 0102.

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Date of creation: 2001
Date of revision:
Handle: RePEc:tuf:tuftec:0102
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  1. Ioannides, Yannis M., 2004. "Neighborhood income distributions," Journal of Urban Economics, Elsevier, vol. 56(3), pages 435-457, November.
  2. Yannis M Ioannides & Jeffrey E Zabel, 2002. "Interactions, Neighborhood Selection, and Housing Demand," Working Papers 02-19, Center for Economic Studies, U.S. Census Bureau.
  3. Alex Anas, 1978. "A Model of Residential Change and Neighborhood Tipping," Working Papers 305, Queen's University, Department of Economics.
  4. Anna Hardman & Yannis Ioannides, 2004. "Income Mixing and Housing in U.S. Cities: Evidence from Neighborhood Clusters of the American Housing Survey," Discussion Papers Series, Department of Economics, Tufts University 0420, Department of Economics, Tufts University.
  5. Case, Anne, 1992. "Neighborhood influence and technological change," Regional Science and Urban Economics, Elsevier, vol. 22(3), pages 491-508, September.
  6. Glaeser, Edward L & Sacerdote, Bruce & Scheinkman, Jose A, 1996. "Crime and Social Interactions," The Quarterly Journal of Economics, MIT Press, vol. 111(2), pages 507-48, May.
  7. Coulson, N Edward & Bond, Eric W, 1990. "A Hedonic Approach to Residential Succession," The Review of Economics and Statistics, MIT Press, vol. 72(3), pages 433-44, August.
  8. Benabou, R., 1992. "Heterogeneity, Stratification, and Growth," Working papers 93-4, Massachusetts Institute of Technology (MIT), Department of Economics.
  9. repec:att:wimass:9127 is not listed on IDEAS
  10. Brock, William A. & Durlauf, Steven N., 2001. "Interactions-based models," Handbook of Econometrics, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 5, chapter 54, pages 3297-3380 Elsevier.
  11. Yannis M. Ioannides, 1999. "Neighborhood Interactions in Local Communities and Intergenerational Transmission of Human Capital," Discussion Papers Series, Department of Economics, Tufts University 9911, Department of Economics, Tufts University.
  12. Binder, M. & Pesaran, M. H., 1998. "Optimal Consumption Decisions under Social Interactions," Cambridge Working Papers in Economics 9805, Faculty of Economics, University of Cambridge.
  13. Dennis Epple & Holger Sieg, 1999. "Estimating Equilibrium Models of Local Jurisdictions," Journal of Political Economy, University of Chicago Press, vol. 107(4), pages 645-681, August.
  14. Schelling, Thomas C, 1969. "Models of Segregation," American Economic Review, American Economic Association, vol. 59(2), pages 488-93, May.
  15. Katherine A. Kiel & Richard T. Carson, 1990. "An Examination of Systematic Differences in the Appreciation of Individual Housing Units," Journal of Real Estate Research, American Real Estate Society, vol. 5(3), pages 301-318.
  16. Stephen Sheppard, 1998. "Hedonic Analysis of Housing Markets," Urban/Regional 9805001, EconWPA.
  17. Gabriel, Stuart A. & Rosenthal, Stuart S., 1999. "Location and the effect of demographic traits on earnings," Regional Science and Urban Economics, Elsevier, vol. 29(4), pages 445-461, July.
  18. Hoyt, William H. & Rosenthal, Stuart S., 1997. "Household Location and Tiebout: Do Families Sort According to Preferences for Locational Amenities?," Journal of Urban Economics, Elsevier, vol. 42(2), pages 159-178, September.
  19. Bond, Eric W. & Coulson, N. Edward, 1989. "Externalities, filtering, and neighborhood change," Journal of Urban Economics, Elsevier, vol. 26(2), pages 231-249, September.
  20. Yannis Ioannides, 2006. "Empirics of Social Interactions," Discussion Papers Series, Department of Economics, Tufts University 0611, Department of Economics, Tufts University.
  21. Ioannides, Yannis M., 2002. "Residential neighborhood effects," Regional Science and Urban Economics, Elsevier, vol. 32(2), pages 145-165, March.
  22. Strange, William, 1992. "Overlapping neighborhoods and housing externalities," Journal of Urban Economics, Elsevier, vol. 32(1), pages 17-39, July.
  23. Pollak, Robert A, 1976. "Interdependent Preferences," American Economic Review, American Economic Association, vol. 66(3), pages 309-20, June.
  24. Miyao, Takahiro, 1978. "Dynamic Instability of a Mixed City in the Presence of Neighborhood Externalities," American Economic Review, American Economic Association, vol. 68(3), pages 454-63, June.
  25. Manski, Charles F, 1993. "Identification of Endogenous Social Effects: The Reflection Problem," Review of Economic Studies, Wiley Blackwell, vol. 60(3), pages 531-42, July.
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