On the Relation between Local Amenities and House Price Dynamics |
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| Authors: | Eli Beracha Ben T Gilbert Tyler Kjorstad Kiplan Womack |
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| Affiliation: | 1. Hollo School of Real Estate, Florida International University, Miami, FL;2. Department of Economics and Finance, University of Wyoming, Laramie, WY;3. Department of Finance, Belk College of Business, University of North Carolina Charlotte, Charlotte, NC |
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| Abstract: | This study explores the extent to which local amenities are related to house price volatility, returns and risk‐adjusted returns across 238 MSAs. We find strong evidence that high amenity areas experience greater price volatility. In regards to returns, high amenity areas experience greater (lower) real returns in appreciating (depreciating) markets. However, high amenity areas experience little to no abnormal risk‐adjusted returns. Results from the study are robust to an endogenous treatment of amenities and land supply elasticity. Overall, we conclude that the desirability of a metropolitan area is a significant channel through which land values drive house price dynamics. |
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