IDEAS home Printed from https://ideas.repec.org/p/gwi/wpaper/2021-17.html
   My bibliography  Save this paper

A New Approach to Measuring Intercity Differences in Housing Costs

Author

Listed:
  • Hyung Joon Chung

    (George Washington University)

  • Nathaniel Harris

    (George Washington University)

Abstract

Intercity housing price indexes that rely on median house price or pooled hedonic regressions adjust imperfectly for differences in housing characteristics. In addition, intercity house price indexes that rely on asset value are a biased measure of differences in the rental price of housing, because capitalization rates vary dramatically across cities. To mitigate these shortcomings, we create Fisher Ideal intercity housing price indexes for both rental and asset prices using a two-way Oaxaca-Blinder decomposition. Our method improves upon current house price indexes by using rental rather than asset prices, controlling for location and housing characteristics, and allowing implicit prices to vary across locations.

Suggested Citation

  • Hyung Joon Chung & Nathaniel Harris, 2021. "A New Approach to Measuring Intercity Differences in Housing Costs," Working Papers 2021-17, The George Washington University, Institute for International Economic Policy.
    • Handle: RePEc:gwi:wpaper:2021-17
    as

    Download full text from publisher

    File URL: https://www2.gwu.edu/~iiep/assets/docs/papers/2021WP/ChungIIEP2021-17.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Qin, Yu & Zhu, Hongjia & Zhu, Rong, 2016. "Changes in the distribution of land prices in urban China during 2007–2012," Regional Science and Urban Economics, Elsevier, vol. 57(C), pages 77-90.
    2. Min Hwang & John Quigley & Jae-young Son, 2006. "The Dividend Pricing Model: New Evidence from the Korean Housing Market," The Journal of Real Estate Finance and Economics, Springer, vol. 32(3), pages 205-228, May.
    3. Mitchel B. Rachlis & Anthony M. J. Yezer, 1985. "Urban Location And Housing Price Appreciation," Papers in Regional Science, Wiley Blackwell, vol. 57(1), pages 155-164, January.
    4. Kelvin J. Lancaster, 1966. "A New Approach to Consumer Theory," Journal of Political Economy, University of Chicago Press, vol. 74(2), pages 132-132.
    5. J. R. Knight & Jonathan Dombrow & C. F. Sirmans, 1995. "A Varying Parameters Approach to Constructing House Price Indexes," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 23(2), pages 187-205, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Paul E. Carrillo & Anthony Yezer, 2021. "What Do Hedonic House Price Estimates Tell Us When Capitalization Rates Vary?," Working Papers 2021-03, The George Washington University, Institute for International Economic Policy.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Alan T. K. Wan & Shangyu Xie & Yong Zhou, 2017. "A varying coefficient approach to estimating hedonic housing price functions and their quantiles," Journal of Applied Statistics, Taylor & Francis Journals, vol. 44(11), pages 1979-1999, August.
    2. Yan Kestens & Marius Thériault & François Des Rosiers, 2006. "Heterogeneity in hedonic modelling of house prices: looking at buyers’ household profiles," Journal of Geographical Systems, Springer, vol. 8(1), pages 61-96, March.
    3. Ádám Banai & Nikolett Vágó & Sándor Winkler, 2017. "The MNB’s house price index methodology," MNB Occasional Papers 2017/127, Magyar Nemzeti Bank (Central Bank of Hungary).
    4. Ward, Clement E. & Lusk, Jayson L. & Dutton, Jennifer M., 2008. "Implicit Value of Retail Beef Product Attributes," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 33(3), pages 1-18.
    5. Reynolds, Travis & Kolodinsky, Jane & Murray, Byron, 2012. "Consumer preferences and willingness to pay for compact fluorescent lighting: Policy implications for energy efficiency promotion in Saint Lucia," Energy Policy, Elsevier, vol. 41(C), pages 712-722.
    6. Czajkowski, Mikołaj & Zagórska, Katarzyna & Letki, Natalia & Tryjanowski, Piotr & Wąs, Adam, 2021. "Drivers of farmers’ willingness to adopt extensive farming practices in a globally important bird area," Land Use Policy, Elsevier, vol. 107(C).
    7. Canessa, Carolin & Venus, Terese E. & Wiesmeier, Miriam & Mennig, Philipp & Sauer, Johannes, 2023. "Incentives, Rewards or Both in Payments for Ecosystem Services: Drawing a Link Between Farmers' Preferences and Biodiversity Levels," Ecological Economics, Elsevier, vol. 213(C).
    8. Hyowon Kim & Dong Soo Kim & Greg M. Allenby, 2020. "Benefit Formation and Enhancement," Quantitative Marketing and Economics (QME), Springer, vol. 18(4), pages 419-468, December.
    9. Anderson, Simon P. & Foros, Øystein & Kind, Hans Jarle, 2012. "Product quality, competition, and multi-purchasing," Discussion Papers 2012/9, Norwegian School of Economics, Department of Business and Management Science.
    10. Mika Kortelainen & Timo Kuosmanen, 2007. "Eco-efficiency analysis of consumer durables using absolute shadow prices," Journal of Productivity Analysis, Springer, vol. 28(1), pages 57-69, October.
    11. Barnett, William A. & Serletis, Apostolos, 2008. "Consumer preferences and demand systems," Journal of Econometrics, Elsevier, vol. 147(2), pages 210-224, December.
    12. Mtimet, Nadhem & Ujiie, Kiyokazu & Kashiwagi, Kenichi & Zaibet, Lokman & Nagaki, Masakazu, 2011. "The effects of Information and Country of Origin on Japanese Olive Oil Consumer Selection," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114642, European Association of Agricultural Economists.
    13. Jitender Singh, 2016. "Quality of Public Goods, Public Policy and Human Development: A State-wise Analysis," Indian Journal of Human Development, , vol. 10(2), pages 215-235, August.
    14. Park, Donghyun & Xiao, Qin, 2009. "Housing Prices and the Role of Speculation: The Case of Seoul," ADB Economics Working Paper Series 146, Asian Development Bank.
    15. Choi, Andy S., 2013. "Nonmarket values of major resources in the Korean DMZ areas: A test of distance decay," Ecological Economics, Elsevier, vol. 88(C), pages 97-107.
    16. Doherty, Edel & Campbell, Danny, 2011. "Demand for improved food safety and quality: a cross-regional comparison," 85th Annual Conference, April 18-20, 2011, Warwick University, Coventry, UK 108791, Agricultural Economics Society.
    17. Schleich, Joachim & Faure, Corinne & Guetlein, Marie-Charlotte & Tu, Gengyang, 2020. "Conveyance, envy, and homeowner choice of appliances," Energy Economics, Elsevier, vol. 89(C).
    18. Trojanek, Radoslaw & Huderek-Glapska, Sonia, 2018. "Measuring the noise cost of aviation – The association between the Limited Use Area around Warsaw Chopin Airport and property values," Journal of Air Transport Management, Elsevier, vol. 67(C), pages 103-114.
    19. Veneziani, Mario & Sckokai, Paolo & Moro, Daniele, 2012. "Consumers’ willingness to pay for a functional food," 2012 First Congress, June 4-5, 2012, Trento, Italy 124101, Italian Association of Agricultural and Applied Economics (AIEAA).
    20. John K. Dagsvik & Zhiyang Jia, 2016. "Labor Supply as a Choice Among Latent Jobs: Unobserved Heterogeneity and Identification," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 31(3), pages 487-506, April.

    More about this item

    Keywords

    intercity house price indices; blinder-oaxaca decomposition; Fisher Ideal index; interarea cost of living differences;
    All these keywords.

    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gwi:wpaper:2021-17. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kyle Renner (email available below). General contact details of provider: https://edirc.repec.org/data/iigwuus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.