The Dynamics of House Price Capitalization and Locational Sorting: Evidence from Air Quality Changes

Corey Lang

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

Abstract: Despite extensive use of housing data to reveal valuation of non-market goods, the process of house price capitalization 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 capitalization and preference-based sorting in response to air quality changes caused by differential regulatory pressure from the 1990 Clean Air Act Amendments. The results demonstrate that owner-occupied units capitalize changes immediately, whereas rent capitalization lags. The delayed but sharp rent capitalization temporally coincides with evidence of sorting, suggesting a strong link between location choices and price dynamics.

Keywords: Hedonic valuation; Capitalization; Sorting; Air Quality (search for similar items in EconPapers)
JEL-codes: Q51 Q53 R23 R31 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2012-09
New Economics Papers: this item is included in nep-env and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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https://www2.census.gov/ces/wp/2012/CES-WP-12-22.pdf First version, 2012 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:cen:wpaper:12-22

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