Intraurban variation in the price of housing

Abstract

Theoretical models of spatial consumer behavior assume the existence of a housing price surface that increases with accessibility. It is often hypothesized that inadequate accessibility measures are responsible for the failure of most empirical studies to support this premise. A general accessibility measure consisting of a double power series in cartesian coordinates is developed and shown to represent a general formulation of traditional accessibility measures. This formulation is incorporated in a hedonic price regression model, and the model is estimated using census tract data for the city of Milwaukee. The hedonic prices are then used to construct intraurban housing price indexes. The results of this study provide strong support for the existence of the presumed price surface. A comparison of this new hedonic price model with traditional models suggests that the double power series formulation is a superior representation of accessibility.