HOUSING SUBSIDIES AND URBAN HOUSEHOLD BEHAVIOR*

ABSTRACT. This paper examines how housing subsidies affect housing and location demands in a monocentric market, identifying the extent to which policies prompt targeted populations to congregate more or less intensely in the central city. Various subsidies are studied: rents based on ability to pay, lump-sum housing aid, housing vouchers, and subsidies based on percentage of rent. The demand effects are seen to hinge critically upon whether or not subsidies are tied to binding consumption restrictions. Policy impacts are shown to be identical for both CBD employed and locally employed consumers targeted for the housing policies.     

THE OPTIMAL LOCATIONS OF BRANCH FACILITIES AND MAIN FACILITIES WITH CONSUMER SEARCH*

ABSTRACT. This paper examines the socially optimal locations of branch facilities (or small stores) and main facilities (or large stores) on a finite linear market that is uniformly populated from position 0 to position 1. Each consumer has a probability w of finding the desired service (or product) at a branch facility, and a probability 1 of finding the desired service (or product) at a main facility. Two types of consumer search are considered: phone search and visit search. Different assumptions are made about the numbers of branch facilities and main facilities (each involving one or two facilities of each type). Under visit search, the socially optimal locations of branch facilities tend to be closer to main facilities than under phone search, and this tendency is more pronounced for smaller values of w.     

UNCERTAIN INCOME AND HOUSING PRICE AND LOCATION CHOICE*

ABSTRACT. In this paper, we adapt recent developments in uncertainty modeling to the location choice paradigm. In particular, we analyze the impact of income and housing price uncertainty on housing demand and location demand characteristics in a partial equilibrium framework. We begin by recognizing that housing consumption cannot readily be altered in response to changes in income and price. We find that income and house price risk affect housing and location demands in different ways. Additionally, the spatial characteristics of price risk also affect consumer housing and location demands. For example, if housing price risk is lower farther from the central city, housing demand can be greater in those locations even with the higher transportation cost. Thus, over some locations, the expected price gradient could be positive.     

SPATIAL HEDONIC MODELS OF AIRPORT NOISE,PROXIMITY, AND HOUSING PRICES*

ABSTRACT Despite the refrain that housing prices are determined by “location, location, and location,” few studies of airport noise and housing prices have incorporated spatial econometric techniques. We compare various spatial econometric models and estimation methods in a hedonic price framework to examine the impact of noise on 2003 housing prices near the Atlanta airport. Spatial effects are best captured by a model including both spatial autocorrelation and autoregressive parameters estimated by a generalized moments approach. In our preferred model, houses located in an area in which noise disrupts normal activities (defined by a day–night sound level of 70–75 decibels) sell for 20.8 percent less than houses located where noise does not disrupt normal activities (defined by a day–night sound level below 65 decibels). The inclusion of spatial effects magnifies the negative price impacts of airport noise. Finally, after controlling for noise, houses farther from the airport sell for less; the price elasticity with respect to distance is −0.15, implying that airport proximity is an amenity.     

IMMIGRATION AND HOUSING BOOMS: EVIDENCE FROM SPAIN*

ABSTRACT We provide causal estimates of the effect of immigration on house prices and construction activity in Spain over the period 2000–2010. During this period Spain experienced spectacular swings in both immigration and the housing market. Our instrumental‐variables estimates suggest that between 2000 and 2010, immigration led to an average 1.5 percent annual increase in the working‐age population. This was responsible for an annual increase in housing prices of about 2 percent, and for a 1.2–1.5 percent increase in housing units. Overall, immigration was responsible for one quarter of the increase in prices and about half of the construction activity over the decade.     

CONSTRUCTION COSTS AND THE SUPPLY OF HOUSING STRUCTURE*

ABSTRACT Construction costs account for the bulk of the price of new houses in most markets, but their study has been relatively neglected. We document that there are economically large differences in construction costs across U.S. housing markets. We also estimate a very elastic supply for physical structure; hence, differences in construction activity across markets do not explain the variation in costs. Supply shifters that collectively do account for differences in building costs include the extent of unionization within the construction sector, local wages, local topography in terms of the presence of high hills and mountains, and the local regulatory environment.     

STRUCTURAL ESTIMATION OF RESIDENTIAL MOBILITY AND HOUSING TENURE CHOICE*

ABSTRACT. This study is devoted to studying households'decisions to move and whether to rent or own after moving. It employs dynamic discrete choice models which condition households'decisions on their circumstances at every point in time during the length of the observation while accounting for individual heterogeneity. The results show that key dynamic elements, captured by means of lagged dependent variables, as well as household heterogeneity, are significant determinants of the tenure choice and mobility decisions. Moreover, homeowners are found to be responsive to housing market conditions when adjusting their housing stock. Housing-price appreciation is found to discourage renters from becoming homeowners. Finally, our results reject the proportional monetary transaction costs specification suggesting that monetary transaction costs might be fixed.     

COMPETITIVE FACILITIES: MARKET SHARE AND LOCATION WITH RANDOM UTILITY*

ABSTRACT. A new approach is proposed for calculating the expected market share. It is assumed that consumers patronize a facility according to a utility function, selecting the facility with the highest utility value. However, consumers'ratings of the utility components are stochastic by some random distribution. Therefore, the buying power of customers located at the same point is divided among several facilities. A probability that a consumer patronizes a certain facility can be calculated. Consequently, the expected market share by competing facilities can be estimated. This calculation is more than 1,000 times faster than repeating a simulation enough times to achieve a reasonable accuracy. The distance decay calculated using the new approach is approximately exponential. A procedure for finding the optimal location anywhere in the plane for a new facility that maximizes the market share is also introduced.     

FLEXIBLE FORM METHODS FOR MEASURING RENT GRADIENTS*

ABSTRACT We develop and demonstrate an empirical methodology for measuring rent gradients in the presence of consumers that have varying tastes for distance to the city center. We derive easily calculated measures of rent gradients, own price elasticities, and income elasticities. We demonstrate the ease of calculation of these functions, even in the presence of consumers who have nonidentical preferences. We also demonstrate how to test for bias in rent gradient estimation that arises from assuming identical preference functions.