Hedonic pricing when housing is endogenous: The value of access to the trans-Israel highway

Michael Beenstock, Dan Feldman, Daniel Felsenstein

Research output: Contribution to journalArticlepeer-review

9 Scopus citations

Abstract

Standard hedonic house pricing assumes that house prices are independent of the intangible to be priced. A methodology is proposed in which the supply as well as the demand for housing depends on the intangible. The methodology is applied to value access to the Trans-Israel Highway (TIH). Using spatial panel data (2002-2008) we show that TIH had two effects on the housing market. It increased house prices in locations with greater access to TIH, and it affected housing construction. Standard hedonic pricing would have underestimated the value of access because it ignores the effects of housing construction on the intangible to be priced. House prices began to increase three years before TIH was inaugurated, but housing construction did not anticipate the inauguration of TIH.

Original languageEnglish
Pages (from-to)134-155
Number of pages22
JournalJournal of Regional Science
Volume56
Issue number1
DOIs
StatePublished - 1 Jan 2016

Bibliographical note

Publisher Copyright:
© 2016 Wiley Periodicals, Inc.

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