Interjurisdictional housing prices and spatial amenities: Which measures of housing prices reflect local public goods?

• Understanding community housing prices is crucial in many research projects.
• We compare community price indices from transaction values, self reports and rents.
• We also assess each based on its correlation with public goods and income.
• Indices based on transaction prices are highly correlated with self-reported values.
• Rental values have the highest correlation with public goods and income levels.

Understanding the spatial variation in housing prices plays a crucial role in topics ranging from the cost of living to quality-of-life indices to studies of public goods and household mobility. Yet analysts have not reached a consensus on the best source of such data, variously using transaction values, self-reported values from the census, and rental values. Additionally, while most studies use micro-level data, some have used summary statistics such as the median housing value.Assessing community housing price indices in Los Angeles, we find that indices based on transaction prices are highly correlated with indices based on self-reported values, but that the former are better correlated with public goods. Moreover, rental values have a higher correlation with public goods and income levels than either asset-value measure. Finally, indices based on median values are poorly correlated with the other indices, public goods, and income.