The Pricing Effects of Open Space Amenities

Posted: 2 Mar 2016

See all articles by Qin Fan

Qin Fan

California State University, Fresno

J. Andrew Hansz

E.V. Williams Center for Real Estate

Xiaoming Yang

California State University, Fresno

Date Written: March 1, 2016

Abstract

A spatial Durbin model (SDM) is developed to estimate the open space proximity values in Fresno-Clovis metropolitan area in Central California circa 2005 to 2012, a time period covering a full market cycle with distinctive boom, bust, and recovery market phases. By controlling for distressed market conditions (vacant, foreclosure, and short-sale transactions) and spillover pricing effects, we find significant but heterogeneous values for proximity to five types of open space amenities. Furthermore, proximity values for parks and golf courses are found to drop by more than 20% in the bust period relative to the boom period. Results show that failing to capture distressed market conditions and market phase, when the housing market is out of equilibrium, leads to biased results. In addition, our findings suggest that ignoring spatial dependence and spillover pricing effects presents a potential bias in estimating open space amenity values. The SDM, which considers spatial dependence and spillovers at a finer scale in the neighborhood, outperforms region fixed effects models when spatial spillovers are significant.

Keywords: Open space amenity value; Housing market cycle; Disequilibrium; Spatial dependence; Spillover pricing effects; Spatial Durbin model

Suggested Citation

Fan, Qin and Hansz, J. Andrew and Yang, Xiaoming, The Pricing Effects of Open Space Amenities (March 1, 2016). Journal of Real Estate Finance and Economics, Vol. 52, No. 3, 2016, Available at SSRN: https://ssrn.com/abstract=2740581

Qin Fan (Contact Author)

California State University, Fresno ( email )

5241 North Maple Avenue
Fresno, CA 93740
United States

J. Andrew Hansz

E.V. Williams Center for Real Estate ( email )

Norfolk, VA 23529-0222
United States
7576833505 (Phone)

Xiaoming Yang

California State University, Fresno ( email )

5241 North Maple Avenue
Fresno, CA 93740
United States

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