Article ID Journal Published Year Pages File Type
983875 Regional Science and Urban Economics 2015 12 Pages PDF
Abstract

•Instrumental Variables, panel data approach using American Housing Survey•Owner-occupied units capitalize changes immediately, but rent price response lags•Dynamic pattern of price response coincides with evidence of sorting

Despite extensive use of housing data to reveal valuation of non-market goods, the process of house price adjustment remains vague. Using the restricted access American Housing Survey, a high-frequency panel of prices, turnover, and occupant characteristics, this paper examines the time path of prices and preference-based sorting in response to air quality changes caused by differential regulatory pressure from the 1990 Clean Air Act Amendments. The results suggest that owner-occupied units capitalize changes quickly, whereas rent prices lag behind amenity levels. The delayed but sharp rent response temporally coincides with evidence of sorting, indicating a strong link between location choices and price dynamics.

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Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
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