Different Data, Different Measures: Comparing Alternative Indicators of Changes in Neighborhood Home Values

Abstract

Urban scholars and practitioners have used changes in neighborhood-level home values to serve as indicators of neighborhood change, including gentrification and disinvestment. A common measure is the “median home value” variable from the American Community Survey (ACS). However, household-level research suggests that self-assessed home values, such as those of the ACS, differ significantly from market-based measures, and medians can be affected by changes in the mix of homes . Transaction-based home price indices are unaffected by such changes and are based on market sales rather than self-assessments, but also have limitations. Moreover, self-assessments of home values might be desired if the intention is to measure the value households place on their homes or to avoid potential biases baked into market values. Comparing changes in the ACS median home value to a common market-based home price index (HPI), we find that the ACS median tends to fall more slowly than the HPI when values are falling and increase more slowly than the HPI when values rise. The differences between the measures are large and are not randomly distributed across space, tending to be larger in neighborhoods where values fall or rise more steeply. They are also related to a variety of neighborhood characteristics.