On the Relation between Local Amenities and House Price Dynamics

43 Pages Posted: 20 Aug 2018

See all articles by Eli Beracha

Eli Beracha

Florida International University

Ben Gilbert

Colorado School of Mines - Division of Economics and Business

Tyler Kjorstad

University of Wyoming

Kiplan S. Womack

UNC Charlotte, Department of Finance, Belk College of Business

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Date Written: Autumn 2018

Abstract

This study explores the extent to which local amenities are related to house price volatility, returns and risk‐adjusted returns across 238 MSAs. We find strong evidence that high amenity areas experience greater price volatility. In regards to returns, high amenity areas experience greater (lower) real returns in appreciating (depreciating) markets. However, high amenity areas experience little to no abnormal risk‐adjusted returns. Results from the study are robust to an endogenous treatment of amenities and land supply elasticity. Overall, we conclude that the desirability of a metropolitan area is a significant channel through which land values drive house price dynamics.

Suggested Citation

Beracha, Eli and Gilbert, Ben and Kjorstad, Tyler and Womack, Kiplan S., On the Relation between Local Amenities and House Price Dynamics (Autumn 2018). Real Estate Economics, Vol. 46, Issue 3, pp. 612-654, 2018, Available at SSRN: https://ssrn.com/abstract=3233272 or http://dx.doi.org/10.1111/1540-6229.12170

Eli Beracha (Contact Author)

Florida International University ( email )

University Park
11200 SW 8th Street
Miami, FL 33199
United States

Ben Gilbert

Colorado School of Mines - Division of Economics and Business ( email )

1500 Illinois Street
Golden, CO 80401
United States

Tyler Kjorstad

University of Wyoming ( email )

Box 3434 University Station
Laramie, WY 82070
United States

Kiplan S. Womack

UNC Charlotte, Department of Finance, Belk College of Business ( email )

9201 University City Blvd.
Charlotte, NC 28223
United States
704.687.7584 (Phone)

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