This article outlines a taxonomy of spatial econometric model specifications that incorporate spatial externalities in various ways. The point of departure is a reduced form in which local or globa...

Spatial Externalities, Spatial Multipliers, And Spatial Econometrics

Meta-analysis is applied to the negative relationship between airport noise exposure and residential property values. The effect size in the analysis is the percent depreciation per decibel increase in airport noise, or the noise discount. Twenty hedonic property value studies are analyzed, covering 33 estimates of the noise discount for 23 airports in Canada and the United States. About one-third of the estimates have not been previously reported in the literature or were not included in previous meta-analyses. The weighted-mean noise discount is 0.58% per decibel. A meta-regression analysis examines the variability in the noise discounts that might be due to country, year, sample size, model specification, mean property value, data aggregation, or accessibility to airport employment and travel opportunities. The analysis indicates that country and model specification have some effect on the measured noise discount, but the other variables have little systematic effect. The cumulative noise discount in the U.S. is about 0.5% to 0.6% per decibel at noise exposure levels of 75 dB or less, while in Canada the discount is 0.8 % to 0.9% per decibel.

/pdf/meta-analysis-of-airport-noise-and-hedonic-property-values-1liq2dowar.pdf

Meta-analysis of airport noise and hedonic property values : problems and prospects

Despite the refrain that housing prices are determined by "location, location, and location," no prior studies of airport noise and housing prices have incorporated spatial econometric techniques. We compare various spatial econometric models and estimation methods in a hedonic price framework to examine the impact of noise on 2003 housing values near the Atlanta airport. Spatial effects are best captured by a model including both spatial autocorrelation and autoregressive parameters estimated by a generalized moments approach. The inclusion of spatial effects magnifies the negative price impacts of airport noise. Finally, after controlling for noise, houses farther from the airport tend to sell for less, implying that airport proximity is an amenity.

/pdf/spatial-hedonic-models-of-airport-noise-proximity-and-2wbhctilpb.pdf

Spatial Hedonic Models of Airport Noise, Proximity, and Housing Prices

Despite the refrain that housing prices are determined by “location, location, and location,” few studies of airport noise and housing prices have incorporated spatial econometric techniques. We compare various spatial econometric models and estimation methods in a hedonic price framework to examine the impact of noise on 2003 housing prices near the Atlanta airport. Spatial effects are best captured by a model including both spatial autocorrelation and autoregressive parameters estimated by a generalized moments approach. In our preferred model, houses located in an area in which noise disrupts normal activities (defined by a day–night sound level of 70–75 decibels) sell for 20.8 percent less than houses located where noise does not disrupt normal activities (defined by a day–night sound level below 65 decibels). The inclusion of spatial effects magnifies the negative price impacts of airport noise. Finally, after controlling for noise, houses farther from the airport sell for less; the price elasticity with respect to distance is −0.15, implying that airport proximity is an amenity.

/pdf/spatial-hedonic-models-of-airport-noise-proximity-and-2uqefiodmn.pdf

Spatial hedonic models of airport noise, proximity, and housing prices*

Statistics for spatial data: by Noel Cressie, 1991, John Wiley & Sons, New York, 900 p., ISBN 0-471-84336-9, US $89.95

The paper applies spatial econometric techniques to measure the impact of airport noise on the price of single-family homes in the Zurich Airport area. We exploit a large database of geo-referenced noise measurements to investigate the reaction of prices to different noise metrics. The particular institutional setting of Zurich Airport, with changing patterns of runways configurations allows to distinguish the impact of noise at different times of the day. The use of neighborhood fixed-effects is compared to the results given by a costlier modelling strategy involving a rich set of location descriptors. The paper documents the impact of airport noise on housing prices. In the base model specification the Noise Discount Index is 0.97% with typical discounts in the range of −2% to −8%. Accounting for the spatiality of the data has little effect on the results.

/pdf/spatial-estimation-of-the-impact-of-airport-noise-on-355xhrv4n7.pdf

Spatial Estimation of the Impact of Airport Noise on Residential Housing Prices

Economists have forcefully argued for the introduction and use of property derivatives as a hedge against house price risk (e.g. Shiller and Weiss, 1999). The rationale for these financial instruments seems clear, as many households are heavily invested in housing and standard financial instruments offer a poor hedge. In practice, however, most of the property derivatives available have been targeted to meet the needs of institutional investors, not those of owner-occupiers. Building on the recent launch of the first Swiss property derivative, we here propose index-linked mortgages tailored to retail consumers. The payments of these mortgages depend on the corresponding housing market performance. We further discuss the stabilization of the homeowner's net wealth, price the instruments, and quantify the expected decrease in the mortgage default risk achieved by these immunization effects.

/pdf/property-derivatives-and-index-linked-mortgages-4kmjm15vhx.pdf

Property Derivatives and Index-Linked Mortgages

Purpose – Switzerland boasts arguably the highest density of green properties in the world. In 2008, more than 15 percent of total new construction received the Swiss energy building label Minergie. The spatial distribution of these green buildings, however, is highly heterogeneous. In some regions, more than half of the new dwellings are built according to the Swiss green building standard. In others, this share is still negligible. The purpose of this paper is to identify the determinants of the distribution of green housing.Design/methodology/approach – For 2,571 Swiss municipalities, the author computes the green building share of new residential buildings. Data are collected for several variables measuring demographic, geographic, social, cultural, and political aspects that – according to the authors' hypothesis – may influence green building activity. Count regression is used to estimate the impact of these variables on the demand for green buildings.Findings – It is found that differences in incom...

http://www.ccrs.uzh.ch/publikationen/workingpapers/2010wp02.pdf

What drives “green housing” construction? Evidence from Switzerland

Economists have forcefully argued for the introduction and use of property derivatives as a hedge against house price risk (e.g. Shiller and Weiss, J. Real Estate Finance Econ., 19(1):21–47, 1999). The rationale for these financial instruments seems clear, as many households are heavily invested in housing and standard financial instruments offer a poor hedge. In practice, however, most of the property derivatives available have been targeted to meet the needs of institutional investors, not those of owner-occupiers. Building on the recent launch of the first Swiss property derivative, we here propose index-linked mortgages tailored to retail consumers. The payments of these mortgages depend on the corresponding housing market performance. We further price the instruments, discuss the stabilization of the homeowner’s net wealth, and quantify the expected decrease in the mortgage default risk achieved by this immunization effect.

/pdf/property-derivatives-and-index-linked-mortgages-3dpoj6ojb6.pdf

The paper applies spatial econometric techniques to measure the impact of airport noise on the price of single-family homes in the Zurich Airport area. A hedonic model is specified with an error component accounting for spatial dependence. The paper takes a differentiated approach on the modelling of aircraft noise. We exploit a large database of geo-referenced noise measurements to investigate the reaction of prices to different noise metrics. The peculiar institutional setting of Zurich Airport, with changing patterns of runways configurations allows to distinguish the impact of noise at different times of the day. The use of neighborhood fixed-effects is compared to the results given by a costlier modelling strategy involving a rich set of GIS-based location descriptors. The paper documents a moderate impact of airport noise on housing prices. In the base model specification the Noise Discount Index is 0.93% with typical discounts in the range of -2% to -8%. Accounting for the spatiality of the data has little effect on the estimated coefficients and their standard errors.

/pdf/spatial-estimation-of-the-impact-of-airport-noise-on-113x7rflbp.pdf

Marco Salvi

Papers

Spatial Estimation of the Impact of Airport Noise on Residential Housing Prices

Property Derivatives and Index-Linked Mortgages

What drives “green housing” construction? Evidence from Switzerland

Property Derivatives and Index-Linked Mortgages

Spatial Estimation of the Impact of Airport Noise on Residential Housing Prices