Explaining intercity home price differences |
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Authors: | Christopher A. Manning |
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Affiliation: | (1) School of Business Administration, Loyola Marymount University, Loyola Blvd. at W. 80th St., 90045 Los Angeles, California, USA |
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Abstract: | This paper develops and tests an equilibrium model seeking to explain intercity variation in owner-occupied housing prices. Empirical tests with a reduced form equation using aggregated 1980 data on 94 SMSAs suggest explanation for 84% of this intercity home price variation. Intercity housing demand, based upon homeowner quality of life equilibrium, is successfully represented by the non-monetary income determinant of climate mildness in addition to several monetary income determinants that reflect household residual after-tax real income. Intercity housing supply was found to be influenced by intercity variation in construction costs and limitations upon the available supply of undeveloped urban land. |
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