Households' Utilities and Hedonic Prices for Inner-City Homes

Abstract

The housing-consumption preferences of a sample of inner-city owner-occupants in Saskatoon are recovered from their unconstrained residential preferences for housing and neighbourhood types. These unconstrained utilities are quantitatively compared with implicit prices for the same housing and neighborhood types, computed from a hedonic housing price model. A first finding is that the households preferred the levels of eight of the twelve residential attributes that were also the higher priced. In contrast, a second finding was that their unconstrained utilities were negatively monotonically related to the hedonic price scales for four attributes, neighborhood housing, renovation/basement, age of construction, and family life cycle of the neighborhood people. The salience of these four divergences between the scales of value, in terms of future land-use and social change in inner-city neighborhoods, is discussed.