Explaining Metropolitan Housing Price Differences

摘要

This paper presents rent and house price indexes which measure variations in housing prices among 54 metropolitan areas. In addition, a model of metropolitan housing price determination is described and used to identify the sources of price variations among metropolitan areas. The model uses 12 explanatory variables. Estimation of the model using data from the Annual Housing Surveys of 1974 to 1976 showed that the model's equations explain close to 90 percent of the variation in rental prices and almost 60 percent of the variation in house prices. The unchangeable forces of scarce or expensive inputs coupled with differences in demand accounted for most of the explained variation. However, the model's proxy variable for development restrictions made statistically significant contributions to both rent and house price differences. Short - run factors such as abnormal vacancy rates or population changes had little effect on metropolitan price differences in rental units. The model's assumption of a unified metropolitan housing market may be too great a simplification for homeowners, since conditions in moderate income or inner city submarkets could differ substantially from those in higher income or suburban submarkets. Additional research is needed, particularly in the area of the effects of local development controls. Tables, footnotes, and a list of 10 references are supplied.