Many applied studies of the structure of urban housing systems involve considerable imprecision in terms of the identification of sub-market boundaries. This is often a function of reliance on prior knowledge, particularly of the potential spatial divisions within urban housing systems. This paper introduces an application of the multi-level hedonic model as a tool to identify housing sub-markets, and as a method of identifying temporal change within the sub-market system. Based on empirical analysis of two study years (2002 and 2006) in the city of Glasgow, this study demonstrates a finely-grained approach to the identification of spatial sub-markets and uncovers evidence of spatial change between the two study years. The multi-level derived sub-market boundaries are shown to be a credible and statistically meaningful alternative to prior notions of the sub-market system. The paper concludes that multi-level models have considerable potential as a tool both to identify the sub-market structure, and for detecting temporal change in the delimitation of sub-markets.
We extend the literature on the impact of externalities using an approach based on a hybrid of hedonic and repeat-sales methods. The externality in question is groundwater contamination in Scottsdale, Arizona. The use of condominium sales allows us to assume that major physical characteristics remain unchanged, but location parameters may be altered by urban growth and development as well as contamination. We find an economically significant discount for properties located in the contaminated area. Interestingly, it does not appear until several years after the contamination becomes publicly known, and it seems to have disappeared before the end of the study period.The last three decades have seen the emergence of a voluminous literature examining the interaction between environmental factors and real estate markets, much of it concerning the extent to which negative environmental spillovers are capitalized into real estate values. These interests have given rise to two broad categories of real estate literature reviewed in Jackson (2001). The first of these is dominated by the appraisal profession and has focused on valuation concepts and methods (see, e.
In the 1950s and 1960s a group of housing economists at ColumbiaUniversity developed a framework for the analyses of urban housing markets which was based around the concept of housing submarkets and household migration. There is now widespread agreement amongst housing economists that submarkets should be adopted as a working hypothesis but the concept has been reformulated in terms of intra-urban relative house price differentials. The accepted test for submarket existence uses a hedonic model of house prices which assumes market equilibrium. This paper returns to an analysis of submarkets which focuses on spatial migration patterns. By examining household intra-urban mobility patterns in the Glasgow housing market it is possible to demonstrate that submarkets tend to be self-contained. The analysis also suggests that the current standard statistical tests may be incomplete and in the case of Glasgow underestimate the number of submarkets.
This paper addresses the structural change in a local urban housing market within a submarket framework. There is a voluminous literature examining the economic structure and operation of urban housing submarkets, with much of the associated empirical work based on static cross-sectional studies. Analysis of the temporal dynamics of local markets has tended to be perfunctory. As such, our understanding of structural change over time remains underdeveloped. In this paper we construct repeat-sale indices at the urban submarket level and deploy cointegration analysis to examine the stability of spatially defined housing submarkets within Glasgow between 1984 and 1997. Specifically, we consider whether price differences between submarkets have been eroded by a process of arbitrage operating through supply-side responses and/or migration flows. The empirical analysis shows that a stable system of housing submarkets persists throughout the study period.
A major unproven hypothesis in housing economics is that regional ripple effects are caused by household migration between regions. This paper examines household migration and price ripples at the level of local housing markets driven partly by the fact that such migration linkages are likely to be more pronounced between local, rather than regional, housing markets. Following a review of regional housing market studies, several hypotheses linking the existence of lead-lag relationships and cointegration with the scale of migratory linkages between local housing market areas (LHMAs) are proposed. Using private housing transactions data for Strathclyde, a sub-region of Scotland, the paper identifies two clusters of LHMAs that differ in terms of their migratory linkages with Glasgow, the hypothesised leading housing market of the sub-region. Tests for lead -lag relationships and cointegration confirm the link between migration and house price changes.
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