Henry O. Pollakowski

Choice of functional form for hedonic price equations

Abstract The appropriate functional form for a hedonic price equation cannot in general be specified on theoretical grounds. In this paper, a statistical procedure for the choice of functional form is proposed. A highly general functional form is specified that yields all other functional forms of interest as special cases. Likelihood ratio tests are used to test the appropriateness of alternative forms. The procedure is illustrated using cross section microdata for housing. For the case considered, the functional forms most commonly used in previous studies are strongly rejected.

On Choosing Among House Price Index Methodologies

This paper compares housing price indices estimated using three models with several sets of property transaction data. The commonly used hedonic price model suffers from potential specification bias and inefficiency, while the weighted repeat-sales model presents potentially more serious bias and inefficiency problems. A hybrid model combining hedonic and repeat-sales equations avoids most of these sources of bias and inefficiency. This paper evaluates the performance of each type of model using a particularly rich local housing market database. The results, though ambiguous, appear to confirm the problems with the repeat sales model but suggest that systematic differences between repeat-transacting and single-transacting properties lead to bias in the hedonic and hybrid models as well. Copyright American Real Estate and Urban Economics Association.

Frequency of Transaction and House Price Modeling

This article examines the characteristics and price behavior of repeatedly transacted properties. Using data from four U.S. counties, we estimate hedonic price models of properties grouped by transaction frequency, and compare estimated standard deviations and estimated appreciation rates by group.For each of four counties studied, we find that estimated house price appreciation is systematically higher among properties that transact more frequently. One possible explanation for this result is that purchasers make property improvements that are not adequately reflected in the available data.We also find that estimated standard deviations of the disturbance term show a marked decrease as the frequency of transaction increases. Since frequently transacting properties are not found to be systematically more homogeneous than seldomly transacting properties, we do not attribute this to any increase in homogeneity for frequently transacting properties, but rather to the length of time elapsed between transactions of properties.The findings of this article suggest that repeat-sales price models may need to be adjusted to account for cross-sectional variation in transaction probabilities---that is, the selectivity of the subsample of properties that transacted (or transacted repeatedly) during any finite study period.

Did Office Market Size Matter in the 1980s? A Time-Series Cross-Sectional Analysis of Metropolitan Area Office Markets

Recent contributions to the literature have resulted in a standard modelling of office markets. The models provide considerable insight into the working of office markets. • Nonetheless, a major difficulty is the use of data for a single city or aggregate data for the U.S. The latter implicitly assumes that model structure is invariant across cities. In this article we test for structural differences in office markets by size class. Rental data from REIS Reports for twenty-one metropolitan areas for the time period 1981 to 1990 are used to model office market behavior. Results suggest market outcomes vary by city size, larger markets are better modelled using standard procedures, and Manhattan behaves quite differently from the other markets. Copyright American Real Estate and Urban Economics Association.

Intrametropolitan Location and Office Market Dynamics

Theory and evidence point to interdependency between office location decisions and dynamic growth paths. For example, clerical and administrative support employees are suburbanizing relatively rapidly in most markets in response to changes in technology and transportation. This paper tests the hypothesis that both cross-sectional and dynamic variables are important determinants of dynamic patterns and office market forecasts.County Business Patterns data at the county and town levels indicate substantial spatial specialization (i.e., agglomeration) by type of office activity. But these agglomerations do shift over time, as indicated by the maintained hypothesis. Our econometric estimates suggest that the demand for office space in submarkets is responsive to agglomerations by type of industry as well as to growth in FIRE employment. The supply of office space is responsive to lagged expected demand. Copyright American Real Estate and Urban Economics Association.

Estimating housing consumption adjustments from panel data

Abstract Although time-series analysis of panel data has generally not been used in the study of housing demand, longitudinal analysis provides the opportunity to increase our understanding of housing adjustments over time. In particular, time series analysis of housing choice using panel data permits appropriate use of both time-series and cross-sectional variation in housing prices, provides the opportunity to separate age and cohort effects, and facilitates integration of mobility analysis with housing choice analysis. In this paper, a longitudinal discrete choice model of the choice of housing tenure and size is presented and estimated using panel data. This conditional fixed effects multinomial logit model, developed by G. Chamberlain, is computationally convenient and successfully accounts for time-invariant differences among households. While household-specific unobserved characteristics can be readily accounted for in a linear model, this is not the case for a quantitative choice model. The use of a model of the type employed here thus provides a crucial link between time series analysis and a discrete choice setting. Estimation of this model yields results with respect to age and price that differ from results obtained from individual and pooled cross-sections. This provides support for the plausible proposition that housing choices are intertemporally correlated, and, more importantly, emphasizes the importance of accounting for this correlation to estimate consistently the parameters of housing choice models.

EFFECTS OF DOWNTOWN IMPROVEMENT PROJECTS ON RETAIL ACTIVITY

Abstract The main objective of pedestrian and transit malls and other improvement projects is often to help revitalize downtown business districts. This paper examines how downtown improvement efforts have affected the entry, growth, and exit of retail and service establishments in those areas. The authors briefly review the widely divergent findings of previous research on the effects of street mall projects on retail sales, then develop an analysis approach using Dun and Bradstreet records on individual establishments. Eight downtown revitalization projects are examined for changes in the profiles and growth rates of establishments at the project locations and in other parts of the cities. The results indicate that changes can range from positive improvements to mere continuation of past negative trends. Differences in project effects are related to differences both in the local economy and in project design and management.

Job Displacement and the Duration of Joblessness: The Role of Spatial Mismatch

This paper presents a new approach to the measurement of the effects of spatial mismatch that takes advantage of matched employer-employee administrative data integrated with a person-specific job accessibility measure, as well as demographic and neighborhood characteristics. The basic hypothesis is that if spatial mismatch is present, then improved accessibility to appropriate jobs should shorten the duration of unemployment. We focus on lower-income workers with strong labor force attachment searching for employment after being subject to a mass layoff – thereby focusing on a group of job searchers that are plausibly searching for exogenous reasons. We construct person-specific measures of job accessibility based upon an empirical model of transport modal choice and network travel-time data, giving variation both across neighborhoods in nine metropolitan areas, as well as across neighbors. Our results support the spatial mismatch hypothesis. We find that better job accessibility significantly decreases the duration of joblessness among lower-paid displaced workers. Blacks, females, and older workers are more sensitive to job accessibility than other subpopulations.

Childhood Housing and Adult Earnings: A Between-Siblings Analysis of Housing Vouchers and Public Housing

To date, research on the long-term effects of childhood participation in voucher-assisted and public housing has been limited by the lack of appropriate data and suitable identification strategies. We create a new, national-level longitudinal data set on housing assistance and labor market earnings to explore how children’s housing affects their later earnings. While naive estimates suggest there are substantial negative long-term consequences to childhood participation in voucher-assisted and public housing, these relationships appear to be driven largely by negative selection into housing assistance programs. To mitigate this source of bias, we employ household fixed-effects specifications that use only within-household (across-sibling) variation for identification. Compared to naive specifications, household fixed-effects estimates are more positive for all demographic groups and, for some groups, positive and statistically significant. Black non-Hispanic females, in particular, benefit from time spent in both voucher-assisted and public housing. Exploiting the between sibling variation accounts for unobserved time-invariant family attributes that may influence outcomes but does not address time varying within household factors that may be at work. We use a number of strategies to address these issues and find our results are results are largely robust to these concerns.

Living With Others as an Alternative to Nursing Home Use

The authors studied a synthetic sample combining information on nonmarried women from surveys of community-resident elderly and nursing home residents to identify factors affecting the probability of observing individuals in one of three situations: living alone, living with others, and residing in a nursing home. Increasing income increased slightly the probability of living alone and had a positive effect on the probability of residing in a nursing home for most income levels within the sample range. As expected, disability and increasing age were very important in distinguishing those in the nursing home from those residing in the community, and also increased the probability of living with others, other things remaining constant. Whites were slightly more likely to live alone and less likely to reside in a nursing home, other things remaining constant. Residing in a warmer climate decreased the probability of being a nursing home resident. The analysis indicates that factors distinguishing nursing home residents from community residents are also at least somewhat useful in distinguishing those who live alone from those who live with others, supporting the inclusion of shared community living arrangements with the nursing home as part of a continuum of supportive living arrangements.