Intrametropolitan Decentralization: Is Government Structure Capitalized in Residential Property Values?

Posted: 9 Feb 2011

See all articles by Stephen B. Billings

Stephen B. Billings

University of Colorado - Boulder

Thomas G. Thibodeau

University of Colorado at Boulder - Leeds School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: February 8, 2011

Abstract

This paper examines the influence that the intrametropolitan growth in special districts has on residential property values. Our empirical approach tests whether the benefits of decentralizing local public good providers increases, decreases or leaves residential property appreciation rates unchanged. Past research in this area has been limited by the lack of variation in government structure within a region and by the self-selection of areas that decentralize governments. This research overcomes these limitations by 1) comparing appreciation rates for single-family homes that were located in areas that added local governments to appreciation rates for properties that were not; and 2) employing an estimation technique that border matches repeat sales to control for the self-selection of government structure. Overall, empirical results indicate that institutional decentralization has no influence on single-family property appreciation rates. It makes no difference whether the new government is the 3rd, 4th, 5th or 6th new jurisdiction - the new government does not influence appreciation rates. Residential property values for homes located in jurisdictions that added security special districts experienced rates of appreciation that were lower than otherwise comparable properties. Recreation, fire, water, sewer and other special districts had no measurable influence on appreciation rates. New governments created in areas whose residents have greater income heterogeneity increase appreciation rates. The distance separating the new government from existing governments, the lend area of the new government and the creation of multiple new governments have no influence on appreciation rates. Finally, these results depend on the border matching repeat sales estimation technique employed here.

Keywords: Government structure, Capitalization, Border matched repeat sales

JEL Classification: H1, H21, R50

Suggested Citation

Billings, Stephen B. and Thibodeau, Thomas G., Intrametropolitan Decentralization: Is Government Structure Capitalized in Residential Property Values? (February 8, 2011). Journal of Real Estate Finance and Economics, Vol. 42, No. 4, 2011. Available at SSRN: https://ssrn.com/abstract=1758016

Stephen B. Billings

University of Colorado - Boulder ( email )

Leeds School of Business
Koelbel Building
Boulder, CO US 80309
United States

Thomas G. Thibodeau (Contact Author)

University of Colorado at Boulder - Leeds School of Business ( email )

Boulder, CO 80309-0419
United States

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