Increase In Housing Values Research Articles

Eco-gentrification and who benefits from urban green amenities: NYC’s high Line

This study estimates the impact of the introduction of New York’s High Line, an elevated walkway in Manhattan by relating the increase in housing values to the issue of eco-gentrification in urban areas. Studies have shown that increasing the amount of green space can lead to gentrification: rising property values, displacement of existing residents, and a large in-migration of wealthy populations. We utilize Geographic Information Systems (GIS) to spatially model the effects of the High Line on residential property values. We exploit spatial and temporal differences of the High Line’s opening to estimate its impact on residential home values. We find that homes closest to the High Line experienced a 35.3% increase in housing values. We estimate the driving force behind this premium by using a triple difference approach by analyzing elevation levels and find that homes with relatively the same height as the High Line receive the largest premium. This study serves to inform policy makers regarding potential inequality of green space provisions. We provide policy recommendations for minimizing the housing price impact of green space creation.

WILL THE HOUSING WEALTH EFFECT COMPENSATE THE MACRO-ECONOMY? EVIDENCE FROM TAIWAN’S DOMESTIC CONSUMPTION

This paper examines the relationship between the escalation in housing prices and categories of Taiwan’s domestic consumption. While disposable income remains constant, a rapid escalation in housing prices should have a negative impact on unaffordability within society. However, under the hypothesis of the housing wealth effect, an increase in housing values should compensate the macro-economy by increasing consumption in the GDP calculation. Taiwanese data from 2007Q1 to 2018Q1 were adopted as the sample. From the vector error correction model results, it was found that over the course of the long-run equilibrium relationship, there was a statistically significant positive relationship that the society consumes more on durable goods of communication-related nature, as well as on non-durable goods such as personal clothing and accessories and leisure/cultural tourism. As for the short-run dynamic adjustment, there was a statistically significant positive relationship that the society consumes more in the durable goods component categories. It was identified that transportationrelated consumption accounted for the major part of the durable goods component. Therefore, with the rapid escalation in housing prices, it was observed that these consumption would compensate the consumption figures in the GDP calculation in Taiwan, thereby providing evidence that housing prices were related to macroeconomic performance.

Teardowns, popups, and renovations: How does housing supply change?

AbstractCities grow in layers over time. As population and land values increase, older, smaller buildings are replaced with higher density, higher value structures. However, direct costs of redevelopment and institutional barriers such as zoning may constrain replacement of older structures, leading to alternate forms of supply adjustment. In this paper, I use data on building permits in Washington DC to examine three different forms of residential investment: new construction, expansion of existing structures, and renovation. Results suggest that new construction accounts for a relatively small part of residential investment and is highly concentrated in a few neighborhoods. Expansions and alterations of existing structures are more frequent and more evenly dispersed across space. Recent increases in housing values are correlated with more new construction, but only among neighborhoods with relatively more permissive zoning. Additions and alterations are more prevalent in neighborhoods with high property values, older housing, and more restrictive zoning.

The effect of school capital investments on local housing markets and household sorting in California

ABSTRACTIn this paper, I investigate what effect school capital investments have on housing values and household location choice in the context of the Tiebout model. This research identifies an exogenous variation in school capital investments by exploiting the lottery allocation of entitlement to an interest-free construction bond among districts in California. Although the lottery is exogenous, additional non-lottery allocation complicates identification. This paper develops an empirical model based on sample selection methods in order to create a counterfactual state in which additional non-lottery allocation would not have existed. I find that receiving the interest-free construction bond increases school capital expenditure and housing values at the district level. I view the increase in housing values as the capitalization of school capital investments. I find little evidence for the effect of the interest-free construction bond on household sorting and student’s academic outcomes.

Housing providers' insights on the benefits of sustainable affordable housing

AbstractThe present research aims to investigate the insights of housing providers on potential benefits of sustainable affordable housing. Housing providers need certainty on the benefits of sustainable affordable housing for homebuyers. We used a cross‐sectional survey questionnaire consisting of 23 benefits of sustainable affordable housing administered to 121 experts from the housing industry. In total, 82% of the housing professional respondents believed that sustainable affordable housing offered all 23 benefits included in the survey. The first five main benefits were an increase in the comfort of homeowners, the enjoyment of natural ventilation, a reduction in water bills, a reduction in electricity bills and an increase in housing values. An exploratory factor analysis returned 5 components: environmental, energy, social, cost and status. The findings provide insight into the drivers of sustainable affordable housing. A framework for the benefits of sustainable affordable housing was developed. The results will be useful for policy‐makers, developers, place managers, housing associations and academics attempting to increase the supply and demand of sustainable affordable housing.

THE EFFECT OF LEGALIZING RETAIL MARIJUANA ON HOUSING VALUES: EVIDENCE FROM COLORADO

Does legalizing retail marijuana generate more benefits than costs? This paper provides a first step toward addressing that question by measuring the benefits and costs that are capitalized into housing values. We exploit the time‐series and cross‐sectional variations in the adoption of Colorado's municipality retail marijuana laws (RMLs) and examine the effect on housing values with a difference‐in‐differences strategy. Our estimates show that the legalization leads to an average 6% increase in housing values, indicating that the capitalized benefits outweigh the costs. In addition, we find suggestive evidence that this relatively large housing value appreciation is likely due to RMLs inducing strong housing demand while having no discernible effect on housing supply. Finally, we show that the effect of RMLs is heterogeneous across locations and property types. (JEL K20, R28)

The impact of residential development on nearby housing prices

PurposeEven as multi-story apartment building development proposals in existing neighbourhoods represent a substantial component of policy debate at local planning boards, there is limited evidence for the impact of such residential developments on surrounding apartment values. This paper aims to address the void in knowledge, and the impact of multi-story apartment building developments on apartment values in residential high-rise areas located outside city and district centres is investigated in Helsinki Metropolitan Area, Finland.Design/methodology/approachWhether a multi-story apartment building development is followed by an increase in housing values depends on both positive and negative externalities. To specify valuation effects of proximate development projects, advanced research design combining matched sample methodology and hedonic-based difference-in-difference approach is used.FindingsIt appears from the analysis that completion of a single multi-story apartment building has an immediate positive impact on apartment values within 300 metre radius, while there is no statistically significant impact on price trend.Research limitations/implicationsThis paper studies apartment values only in Helsinki Metropolitan Area, Finland, and it is important to notice that local regulations and market conditions may have a notable impact on the outcomes.Originality/valueThis study is the first of its kind to provide with statistically significant evidence for positive impacts from multi-story apartment building development in Finnish residential high-rise areas and may have a crucial role in helping to dispel prejudices related to such developments.

Gentrification effects of China’s urban village renewals

China is known in the post-cold war era for its rapid urban regeneration. Urban villages that emit negative social externalities are a unique and salient disamenity, and are central to the urban regeneration policy and planning. This paper uses micro-geographical data to explore how the extent and configuration of recently renewed urban villages in Beijing have influenced nearby housing values. Compared with locations having similar demographic characteristics, locations near urban village renewal sites experienced increases in housing values. Additional results quantify evidence in support of the heterogeneous effects from urban village renewals in affected areas versus unaffected areas.

Urban coastal development in valencian country: a paradigmatic case of non-sustainable development

The period between 1997 and 2007 was a period of economic expansion in Europe, and especially in Spain, where it was based on the real-estate bubble. Valencian Country, in Mediterranean coast, is a special case inside Spain because its economy specialized in the housing construction sector for non-primary houses. House construction was possible due to the increase in private debt of developers and buyers. The (artificially self-generated) expectation of strong annual increases in housing values maintained an intense construction activity. In 2007, the price of houses peaked and then began a process of impoverishment due to the payment of debts. Today this process is still continuing, but extensive data on the complete cycle of expansion and regression of the housing bubble are already available. This paper presents a real description of the complete process of non-sustainable urban development in Valencian Country and analyzes the process in economic, social and environmental terms. Finally, a general scheme of the process and a system of sustainability is proposed.

Local public goods and the demand for high-income municipalities

Affluent towns often deliver high-quality public services to their residents. I estimate the willingness to pay to live in a high-income suburb, above and beyond the demand of wealthy neighbors, by measuring changes in housing prices across city–suburban borders as the income disparity between the two municipalities changes over time. I find that a $10,000 increase in town-level median income is associated with a seven percent increase in housing values at the border. The estimated demand for high-income municipalities is primarily driven by school quality and lower property tax rates.

Mobility, housing markets, and schools: Estimating the effects of inter-district choice programs

In theoretical models of residential sorting, a household's location decision is closely linked to its demand for local public services, such as schooling. Since school choice programs weaken the link between residential location and schooling options, they have the potential to affect both property values and residential location choices. Results derived from computable general equilibrium models suggest these effects could be large, but there is limited empirical evidence concerning whether they actually occur. This paper develops and tests predictions concerning the impact of inter-district choice programs on housing values and residential location decisions. Our empirical results strongly confirm our theoretical predictions and the findings of the computable general equilibrium literature: after their states adopt inter-district choice programs, districts with desirable nearby, out-of-district schooling options experience relatively large increases in housing values, residential income, and population density.

Do Households Prefer Small School Districts? A Natural Experiment

Some education reformers have proposed breaking up large urban school districts, thereby moving to a more efficient scale, increasing school choices, and promoting school competition. This article tests whether households expect these effects and whether they value them. It considers the effect on real estate prices of the surprise breakup of the Los Angeles Unified School District (LAUSD) into 11 minidistricts in April 2000. We estimate households' reaction to this reform in a difference‐in‐differences setting that controls for any unobserved spatial effects unaffected by the announcement.We find that households valued this decentralization, with a 2–3 percentage point increase in housing values in the LAUSD area over pre‐existing trends, compared with control districts. The effect is highest in wealthier neighborhoods but otherwise homogenous within the LAUSD area. The results suggest that households believe that decentralization would make schools more effective and that they respond to signals about schools' future.

Estimation of a spatial simultaneous equation model of population migration and housing price dynamics

Identifying the local interactions between housing prices and population migration is complicated by their simultaneous and spatially interdependent relationship. Higher housing prices may repel households and push them into neighboring areas, suggesting that separately identifying interactions within versus across local neighborhoods is important. Aggregate data and standard econometric models are unable to address the multiple identification problems that may arise from the simultaneity, spatial interaction, and unobserved spatial autocorrelation. Such problems can generate biased estimates that run counter to economic theory. Using Michigan census tract-level data, we estimate a spatial simultaneous equations model that jointly considers population change and housing values, while also explicitly modeling interactions within neighborhoods, spatial interactions across neighborhoods, and controlling for unobserved spatial correlations. After controlling for simultaneity and spatial autocorrelation, the results show that neighborhoods are likely to experience an increase in their housing values if they gain population and they are more likely to lose population if they experience an increase in housing values. Our results are consistent with theory and underscore the importance of accounting for spatial interdependencies between population change and housing values.

Does Air Quality Matter? Evidence from the Housing Market

We exploit the structure of the Clean Air Act to provide new evidence on the capitalization of total suspended particulates (TSPs) air pollution into housing values. This legislation imposes strict regulations on polluters in “nonattainment” counties, which are defined by concentrations of TSPs that exceed a federally set ceiling. TSPs nonattainment status is associated with large reductions in TSPs pollution and increases in county‐level housing prices. When nonattainment status is used as an instrumental variable for TSPs, we find that the elasticity of housing values with respect to particulates concentrations ranges from −0.20 to −0.35. These estimates of the average marginal willingness to pay for clean air are robust to quasi‐experimental regression discontinuity and matching specification tests. Further, they are far less sensitive to model specification than cross‐sectional and fixed‐effects estimates, which occasionally have the “perverse” sign. We also find modest evidence that the marginal benefit of reductions of TSPs is lower in communities with relatively high pollution levels, which is consistent with preference‐based sorting. Overall, the improvements in air quality induced by the mid‐1970s TSPs nonattainment designation are associated with a $45 billion aggregate increase in housing values in nonattainment counties between 1970 and 1980.

Does Air Quality Matter? Evidence from the Housing Market

We exploit the structure of the Clean Air Act to provide new evidence on the capitalization of total suspended particulates (TSPs) air pollution into housing values. This legislation imposes strict regulations on polluters in nonattainment counties, which are defined by TSPs concentrations that exceed a federally set ceiling. TSPs nonattainment status is associated with large reductions in TSPs pollution and increases in county-level housing prices. When nonattainment status is used as an instrumental variable for TSPs, we find that the elasticity of housing values with respect to particulates concentrations range from -0.20 to -0.35. These estimates of the average marginal willingness-to-pay for clean air are far less sensitive to model specification than cross-sectional and fixed effects estimates, which occasionally have the perverse sign. We also find modest evidence that the marginal benefit of pollution reductions is lower in communities with relatively high pollution levels, which is consistent with preference-based sorting. Overall, the improvements in air quality induced by the mid-1970s TSPs nonattainment designation are associated with a $45 billion aggregate increase in housing values in nonattainment counties between 1970 and 1980.