Housing Market Fluctuations and the Implicit Price of Water Quality: Empirical Evidence from a South Florida Housing Market
Okmyung Bin (),
Jeffrey Czajkowski (),
Jingyuan Li () and
Gabriele Villarini ()
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Okmyung Bin: East Carolina University
Jeffrey Czajkowski: University of Pennsylvania
Jingyuan Li: I.M. Systems Group
Gabriele Villarini: University of Iowa
Environmental & Resource Economics, 2017, vol. 68, issue 2, 319-341
Abstract In this study we utilize a hedonic property price analysis to examine changes in the implicit price of water quality given housing market fluctuations over time. We analyze Martin County, Florida waterfront home sales from 2001 to 2010 accounting for the associated significant real estate fluctuations in this area through flexible econometric controls in space and time. We apply a segmented regression methodology to identify housing market price instability over time, interact water quality with these identified market segmentations, and embed these interactions within a spatial fixed effect model to further account for any spatial heterogeneity in the waterfront market. Results indicate that water quality improvement is associated with higher property values. We find no evidence that the economic downturn crowded out concern for the water quality in this area. We further impute an implicit prices of $2614, evaluated at the sample mean, for 1 % point increase in the water quality grade.
Keywords: Hedonic price; Housing market fluctuations; Segmented regression; Spatial fixed effects; Water quality; D12; Q25; Q26; R21 (search for similar items in EconPapers)
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