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Explaining intercity home price differences

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Abstract

This paper develops and tests an equilibrium model seeking to explain intercity variation in owner-occupied housing prices. Empirical tests with a reduced form equation using aggregated 1980 data on 94 SMSAs suggest explanation for 84% of this intercity home price variation. Intercity housing demand, based upon homeowner “quality of life” equilibrium, is successfully represented by the “non-monetary income” determinant of climate mildness in addition to several monetary income determinants that reflect household residual after-tax real income. Intercity housing supply was found to be influenced by intercity variation in construction costs and limitations upon the available supply of undeveloped urban land.

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Authors and Affiliations

  1. School of Business Administration, Loyola Marymount University, Loyola Blvd. at W. 80th St., 90045, Los Angeles, California, USA

    Christopher A. Manning (Associate Professor of Finance and Real Estate)

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  1. Christopher A. Manning
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Manning, C.A. Explaining intercity home price differences. J Real Estate Finan Econ 2, 131–149 (1989). https://doi.org/10.1007/BF00159795

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