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Rent Shifts in American Rental Housing Markets, 2000-2009: Directional Heterogeneity in Distance Decay Patterns

Li, Xiaofei
Waldorf, Brigitte
Florax, Raymond
Year of Publication: 
Series/Report no.: 
51st Congress of the European Regional Science Association: "New Challenges for European Regions and Urban Areas in a Globalised World", 30 August - 3 September 2011, Barcelona, Spain
This paper investigates the spatial effects operating in rental housing markets of selected US cities. It is well known that spatial effects in addition to neighborhood and housing attributes influence prices in urban housing markets. However, dealing with spatial effects is often confined to choosing the best specification from the large array of available spatial econometric models (the spatial lag, spatial error, or spatial Durbin model, and more extensive higher-order variants). Typically, there is not sufficient attention for disentangling distance, direction, and spillover effects resulting from small-scale dependencies. In addition, the literature provides only scant evidence of explicit theoretical foundations for the various components of spatial effects. This paper begins by conceptualizing the separate and joint effects of distance, direction and spillovers on urban rents and rent changes, going back to the theories of Alonso, Muth and Mills. Their seminal work stipulates that an intra-urban spatial equilibrium is attained by high housing prices in the central business district in combination with high amenity values and low commuting cost. Later extensions of their work have pointed to the polycentric nature of cities (Henderson and Mitra) and the existence of "sectors" along the main transportation corridors (Hoyt)...
Document Type: 
Conference Paper

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