Location, Location, Location: The 3L Approach to House Price Determination

Jeffrey Zabel and Katherine Kiel

Working Papers from U.S. Census Bureau, Center for Economic Studies

Abstract: The immobility of houses means that their location affects their values. This explains the common belief that three things determine the price of a house: location, location, and location. We use this notion to develop the 3L Approach to house price determination. That is, prices are determined by the Metropolitan Statistical Area (MSA), town, and street where the house is located. This study creates a unique data set based on data from the American Housing Survey (AHS) consisting of small ‘clusters’ of housing units with information on their housing characteristics and resident characteristics that is merged with census tract-level attributes. We use this data to verify the 3L Approach: we find that all three levels of location are significant when estimating the house price hedonic equation. This indicates that individuals care about their local neighborhood, i.e. the general upkeep of their street and possibly their neighbors’ characteristics (cluster variables), a broader area such as the school district and/or the town (tract variables) that account for school quality and crime rates, and the particular amenities found in their MSA.

Pages: 41 pages
Date: 2004-05
New Economics Papers: this item is included in nep-geo and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://www2.census.gov/ces/wp/2004/CES-WP-04-06.pdf First version, 2004 (application/pdf)

Related works:
Journal Article: Location, location, location: The 3L Approach to house price determination (2008)
Working Paper: Location, location, location: The 3L Approach to house price determination (2004)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cen:wpaper:04-06

Access Statistics for this paper

More papers in Working Papers from U.S. Census Bureau, Center for Economic Studies Contact information at EDIRC.
Bibliographic data for series maintained by Dawn Anderson ().