Premium
Searching for Goldilocks: The Distance‐Based Capitalization Effects of Local Public Services
Author(s) -
DronykTrosper Trey
Publication year - 2016
Publication title -
real estate economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.064
H-Index - 61
eISSN - 1540-6229
pISSN - 1080-8620
DOI - 10.1111/1540-6229.12171
Subject(s) - capitalization , amenity , service (business) , goldilocks principle , business , capitalization rate , hedonic pricing , economics , real estate , econometrics , finance , marketing , real estate investment trust , philosophy , linguistics , physics , astrobiology
This article empirically models the effect of distance on residential property values of three different types of services, fire, police and emergency medical services. Interesting economic trade‐offs emerge as service station proximity provides both amenity and disamenity effects. Using over three million home sales from the state of Florida along with two different measures of distance, this study provides evidence of nonlinear capitalization effects on local housing values. A difference‐in‐difference model utilizing new facility construction provides corroborating evidence of these findings.