Three Essays on Real Estate, Environmental, and Urban Economics Using the Hedonic Price Model Technique

Abstract

This dissertation is organized into three different topics in the fields of real estate economics, environmental economics, and urban economics, all of them linked by a common econometric technique. The first topic determines the impact of real estate agents on house prices that are located close to an environmental disamenity. The main hypothesis is that real estate agents obtain higher prices than those theoretically expected when the houses are located closer to an environmental disamenity. The analysis takes into consideration the impact of differences in information about the presence of the environmental disamenity between buyers, sellers, and their real estate agent that ultimately have an impact on their bargaining position. The estimated hedonic price model is used to predict house values for transactions done with and without a real estate agent, and calculate their percentage differences at various distance intervals from the landfills. vi The second topic concerns the value of open space to residents in agricultural areas. Valuing open space differs from one user to another. Also, open space valuation differs by type of open space. A spatial hedonic price model is formulated to estimate the marginal value of an additional unit of land of different types of open space on residential houses located in urban and suburban areas. The econometric specification corrects for problems arising from spatial correlation and spatial heterogeneity. Further, the price paid for a property is divided into the portion pertaining to the house and the portion pertaining to the land where the house is located. This results in a system of two hedonic equations for housing and land values as a function of their characteristics. The last topic estimates four demand equations for neighborhood dissimilarities to shed light into the economics of neighborhood residential choice. Theories about the causes of neighborhood segregation, particularly of racial segregation, abound in the urban economics literature, yet they are not consistent about explaining the causal relationships that lead to segregation in the housing market.