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We document how a select set of large and growing metropolitan areas have accommodated growth in their housing supply over 40 years. In particular, we examine how housing provision has evolved for the largest four metropolitan statistical areas (MSAs) in California and Texas. Despite differences in their topographies and regulatory environments, we find several common dynamics. As these MSAs grow, we see that fewer new net units are built at the periphery and a smaller share of the new units are built as single‐family detached houses. As a greater share of new net units are built in infill locations, more units are built using higher‐density—and more costly—multifamily housing construction techniques. Interestingly, we see these housing supply patterns in both "pro‐growth" MSAs and "highly regulated" MSAs. Among all of our sample MSAs, we also find a declining share of Census tracts that participate in accommodating growth. Our results are consistent with the existence of a convex housing supply curve. We believe that this secular trend will pose genuine challenges to many urban housing policies aimed at improving affordability. [ABSTRACT FROM AUTHOR]

This paper examines index revision in measuring the prices for owner-occupied housing. We consider the context of equity insurance and the settlement of futures contracts. In addition to other desirable characteristics for aggregate price indexes, their usefulness in these contexts requires stability as they are revised. Methods that are subject to substantial or complex revision raise questions about the viability of derivatives markets. Of course, all indexes are subject to revision as the result of new information. Nevertheless, we find that the most-widely used house price indexes are not equally exposed to volatility in revision. Hedonic indexes appear to be substantially more stable than repeat-sales indexes and are less prone to substantial revision in the light of new information. Moreover, we find that the repeat-sales indexes are subject to systematic downward revision. We analyze alternative settlement procedures and contracts to mitigate the impact of revision associated with repeat sale indexes.

This article examines index revision in measuring the prices for owner-occupied housing. We consider revision in the context of equity insurance and the settlement of futures contracts. The usefulness of aggregate housing price indexes in these contexts requires stability as they are extended. Methods that are subject to substantial revision raise questions about the viability of derivatives markets. We find that the most widely used house price indexes are not equally exposed to volatility in revision. Hedonic indexes appear to be substantially more stable than repeat-sales indexes and are not prone to the systematic downward revision found in the repeat-sales indexes.

Estimates of the prices of housing and the value of the stock are derived from observations on housing transactions. These transactions may well be a non-random sample of the underlying population of dwellings. For example, it is widely thought that smaller "starter homes" sell more frequently than more expensive properties and that the frequency of transactions on high-valued properties varies over the business cycle. This paper considers the importance of these selectivity issues in making imputations about housing price trends. We estimate a model of housing price determination and of the nonrandom selection of observed transactions. We analyze the factors affecting the probabilities that transactions on different houses will be observed, and we estimate the effect of these factors upon housing prices. The analysis considers a variety of plausible selection models. For each of the alternatives, the estimated effect of selectivity upon housing price calculations is quite substantial.The analysis is based on a unique body of data containing observations of all house sales in Sweden during the period 1981- 1993.

This article highlights the role of land and housing submarkets in the construction of aggregate house price indexes and in the estimated value of the housing stock. We document idiosyncratic house price appreciation and sales volumes across submarkets within metropolitan areas that result in a sample of sold homes that are representative neither of the housing stock nor its appreciation over time. Commonly used aggregate price indexes, like the Federal Housing Finance Agency (FHFA) and Case‐Shiller indexes, fail to capture these local dynamics and produce indexes and estimates of the value of the stock that are biased. Our approach is to build "locally‐pooled" indexes and then weight these local price indexes by their submarket's share of the housing stock to estimate our metropolitan‐level index. This allows for more accurate movements in urban land prices, which is especially important in higher cost land markets. We show traditional globally pooled indexes exhibit significant bias. This may complicate research that makes use of the traditional house price indexes. [ABSTRACT FROM AUTHOR]

To authenticate to the full-text of this article, please visit this link: http://dx.doi.org/10.1111/j.1467-9787.2010.00664.x Byline: Daniel P. McMillen (1), Christian L. Redfearn (2) Abstract: ABSTRACT. In contrast to the rigid structure of standard parametric hedonic analysis, nonparametric estimators control for misspecified spatial effects while using highly flexible functional forms. Despite these advantages, nonparametric procedures are still not used extensively for spatial data analysis due to perceived difficulties associated with estimation and hypothesis testing. We demonstrate that nonparametric estimation is feasible for large datasets with many independent variables, offering statistical tests of individual covariates and tests of model specification. We show that fixed parameterization of distance to the nearest rapid transit line is a misspecification and that pricing of access to this amenity varies across neighborhoods within Chicago. Author Affiliation: (1)Institute of Government and Public Affairs, Department of Economics, University of Illinois at Urbana-Champaign, 1007 W. Nevada St., Urbana, IL 61801. E-mail:mcmillen@illinois.edu (2)School of Policy, Planning and Development, University of Southern California, Los Angeles, CA 90089-0626. E-mail:redfearn@usc.edu Article History: Received: October 2007; revised: December 2008; accepted: July 2009.

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.jue.2006.08.009 Byline: Christian L. Redfearn Keywords: Urban economics; Agglomeration; Subcenters; Employment density; Nonparametric; Intraurban employment dynamics Abstract: While it is well recognized that US metropolitan areas are polycentric, there is little consensus as to the appropriate method for identifying concentrations of employment within them. Existing methods suffer from strong assumptions about parametric form, misspecification, or reliance on local knowledge to calibrate model parameters. This paper introduces a new nonparametric method for identifying subcenters. Results indicate that this, more flexible, nonparametric approach yields greater accuracy with regard to both urban and suburban centers compared with other approaches. This approach should provide better data for the numerous topics that depend on the spatial accounting of employment within metropolitan areas. Author Affiliation: School of Policy, Planning, and Development, University of Southern California, Los Angeles, CA 90089-0626, USA Article History: Received 9 March 2005; Revised 14 August 2006

To purchase or authenticate to the full-text of this article, please visit this link: http://dx.doi.org/10.1111/j.1467-9787.2006.00485.x Byline: Christian L. Redfearn (1) Abstract: ABSTRACT. This paper focuses on the emergence of Krakow's historic core as the city's economic center after Poland's economic reforms of 1989-reforms that introduced market forces into land markets. Using a semiparametric approach to identify pricing centers, an evolving and polycentric price surface is revealed. While the traditional city center emerges as the dominant node, the evolution of the price surface is far more complex than that found using alternative approaches. Accordingly, it yields superior explanatory power compared to simpler monocentric models and should caution against their use in metropolitan areas in transition or those that are polycentric. Author Affiliation: (1)School of Policy, Planning, and Development, University of Southern California, Los Angeles, California 90089-0626. E-mail:redfearn@usc.edu Article History: Received: March 2005; Revised: January 2006; Accepted: February 2006.

We examine commercial land markets in Krakow, Poland over a 10-year period of transition from socialist management to a market economy. We explore the spatial and temporal evolution of land [...]

An enhanced methodology for measuring asset prices for such durables as residential housing is presented. This model relies on different recently developed approaches for synthesizing hedonic and repeat-sales techniques for the formulation of housing price indexes. The method is applied to the computation of price indexes for dwellings occupied by owners in Sweden. The data on individual house sales and features of dwellings, structures and parcels included all used owner-occupied homes sold at arms length in that country from Jan 1981 to Aug 1993. Findings demonstrated the significance of the different facets of quality in the housing-price trend. Results also confirmed the role of individual-specific and unique aspects of housing. The results were compared to price patterns found through traditional techniques.