Interjurisdictional Housing Prices and Spatial Amenities: Which Measures of Housing Reflect Local Public Goods?

31 Pages Posted: 19 May 2012 Last revised: 16 Jun 2012

See all articles by H. Spencer Banzhaf

H. Spencer Banzhaf

Georgia State University - Department of Economics; PERC - Property and Environment Research Center; National Bureau of Economic Research (NBER)

Omar Farooque

Northwestern University

Date Written: January 1, 2012

Abstract

Understanding the spatial variation in housing prices plays a crucial role in topics ranging from the cost of living to quality-of-life indices to studies of public goods and household mobility. Yet analysts have not reached a consensus on the best source of such data, variously using self-reported values from the census, transactions values, tax assessments, and rental values. Addi-tionally, while most studies use micro-level data, some have used summary statistics such as the median housing value.

Assessing community price indices in Los Angeles, we find that indices based on transactions prices are highly correlated with indices based on self-reported values, but the former are better correlated with public goods. Moreover, rental values have a higher correlation with public goods and income levels than either asset-value measure. Finally, indices based on median values are poorly correlated with the other indices, public goods, and income.

Suggested Citation

Banzhaf, H. Spencer and Farooque, Omar, Interjurisdictional Housing Prices and Spatial Amenities: Which Measures of Housing Reflect Local Public Goods? (January 1, 2012). Andrew Young School of Policy Studies Research Paper Series No. 12-16. Available at SSRN: https://ssrn.com/abstract=2062536 or http://dx.doi.org/10.2139/ssrn.2062536

H. Spencer Banzhaf (Contact Author)

Georgia State University - Department of Economics ( email )

P.O. Box 3992
Atlanta, GA 30302-3992
United States
404-413-0252 (Phone)

HOME PAGE: http://www2.gsu.edu/~prchsb/

PERC - Property and Environment Research Center

2048 Analysis Drive
Suite A
Bozeman, MT 59718
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Omar Farooque

Northwestern University ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

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