Is There a Diminishing Value of Urban Amenities as a Result of the COVID-19 Pandemic? (original) (raw)
Related papers
Regional Science and Urban Economics
We employ the Covid-19 pandemic as an unanticipated event in order to investigate the willingness to pay for consumption amenities such as restaurants, cinemas and theaters. We use a hedonic pricing model in combination with a time-gradient difference-indifference approach. Our data set contains virtually all apartments for sale in the larger Stockholm area. We use a very detailed and flexible definition of the density of consumption amenities based on the exact location of these amenities and the walking distance from the apartments to these amenities. Although there are differences between specifications, we find a decrease of 3.9 percent of apartments that we label as amenity rich. Based on the average apartment price, this equals a drop of 195,240 Swedish Kronor (or almost 22,000 US dollars).
Acta Turistica, 2024
The hedonic price model has been used to analyse the price of hotel rooms since the beginning of the 1990s and it has subsequently taken over as the standard manner of determining which factors affect room rates the most. However, some forms of government interventions, such as the implementation of travel subsidies, may diminish the degree in which the room rates reflect the implicit prices of hotel characteristics, something which generates concerns in regards to the applicability of the hedonic pricing model in the presence of subsidies. The present paper investigates these concerns by estimating hedonic price models using room rates from Cyprus – a nation whose economy is heavily reliant on the sector of travel and tourism – right after the implementation of a substantial holidays subsidy scheme. The main findings suggest that the implicit prices of hotel attributes are distorted in the presence of subsidies, thus calling for precaution in the application of the hedonic pricing model in such cases of governmental intervention. The findings also call for the theoretical framework of hedonic analysis to be amended in order to incorporate and explain the effect of price subsidies in the implicit prices of the characteristics of the hotels.
Hedonic Modeling for a Growing Housing Market: Valuation of Apartments in Complexes
The share of apartment complexes in housing stock of major cities in the developing world has been increasing. They represent a different housing submarket whose growing importance necessitates further research. Using survey data on transaction records of real estate agents, we employ a hedonic pricing model to explore the factors influencing apartment prices in the Metropolitan Izmit area. The site of a major reconstruction effort following a strong earthquake, Izmit has been in the forefront of the changes taking place in the Turkish real estate sector in particular, and in urban housing in general. We aim to get better estimates by focusing the study on apartment complexes in Metropolitan Izmit, the major submarket in the area. The results reveal that structural characteristics of an apartment as well as amenities provided in an apartment complex are important determinants of price. Air quality and proximity to a good public school have a major effect on price as well. The findings suggest that the submarket could be segmented further geographically.
Critical Housing Analysis, 2020
Prior to the onset of the pandemic, evidence on the conversion of regular rental housing into permanent holiday homes has fuelled concerns that Airbnb and other short-term rentals contribute to the shortage of affordable homes and to the displacement of regular residents in cities with high housing demand. When the pandemic set in, the media was quick to speculate that holiday homes would be returned to the regular rental market. This paper provides some theoretical reflections on the factors that are driving and impeding such a development and presents preliminary results from an ongoing research project that empirically traces the impacts of COVID-19 on the rental housing market based on an analysis of real estate listings in four large Austrian cities. We argue that a current shift to the regular rental market is likely, but that the medium-and long-term development is uncertain. Empirically, we demonstrate that such a shift has occurred in all four cities considered. We do not find evidence, however, that the increased rental housing supply has dampened rent levels.
A Note on Hedonic Valuation of Urban Amenities Using Unbalanced Data
SSRN Electronic Journal, 2000
Hedonic valuation of urban amenities often requires estimating housing and labor market regressions. It is difficult to get both types of data for all survey respondents. We show that the common practice of handling the unbalanced data by conducting two separate regressions can lead to inconsistent covariance matrix estimation and improper inference regarding confidence intervals for amenity values. We then demonstrate how two easily-implementable yet consistent techniques can be used for hedonic valuation with an application in valuing temperature increases in urban Brazil. All techniques estimate a net positive marginal value of a temperature increase. Unlike the separate equation estimation, however, techniques using a consistent covariance estimator are unable to reject at the 5 percent level the null hypothesis of a zero welfare effect.
Hedonic prices, demands for urban housing amenities, and benefit estimates
Journal of Urban Economics, 1981
This paper uses a Rosen, two-step, hedonic price-trait demand approach to estimate demand functions for a vector of urban amenities. To ascertain whether this theoretically preferred approach yields benefit estimates which differ from the oft-used Ridker-Henning, one-step, hedonic approach we conduct a sensitivity analysis. We find that the two-step approach does yield different benefit estimates and that the differences are large for some amenities. The estimates are sensitive to the functional form of the hedonic equation when the forms are significantly different according to modified Box-Cox results, but are not particularly sensitive to specification of the amenity demand equation. 'We are indebted to Ray Batallio, A. Myrick Freeman III, A. Thomas King, Peter Linneman, Rati Ram, David Spencer, and participants in the Urban Economics Workshop at the University of Chicago for helpful comments and thank Vernon Pohlman for his assistance with the census data.
The Impact of the COVID-19 Pandemic on the Demand for Density: Evidence from the U.S. Housing Market
Federal Reserve Bank of Dallas, Working Papers, 2020
Cities are shaped by the strength of agglomeration and dispersion forces. We show that the COVID-19 pandemic has reintroduced disease transmission as a dispersion force in modern cities. We use detailed housing data to study the impact of the COVID-19 pandemic on the location demand for housing. We find that the pandemic has led to a greater decline in the demand for housing in neighborhoods with high population density. We further show that the reduced demand for density is partially driven by the diminished need of living close to jobs that are telework-compatible and the declining value of access to consumption amenities. Neighborhoods with high pre-COVID-19 home prices also see a greater drop in housing demand. While the national housing market partially recovered in June, we show that the negative effect of the pandemic on the demand for density persists, indicating that the change in the demand for density may last beyond an aggregate recovery of housing demand.
Impacts of the COVID-19 pandemic on private rental housing prices in Turkey
Asia-Pacific Journal of Regional Science
Rent prices have a strong relationship with economic factors in addition to the structural and environmental characteristics of housing stocks. Previous research demonstrated that impacts of unexpected and sudden circumstances such as war and epidemics on urban housing markets relate to their effects on the economy. Following the first COVID-19 case in Turkey, which was officially announced on 11 March 2020, changes in both housing preferences and economic structure have significantly affected the rental housing market due to the pandemic conditions. To highlight challenges in the rental housing market, this study addressed how the COVID-19 pandemic has influenced rental housing prices in 81 provinces of Turkey using the big data set of Endeksa, a private real-estate platform in Turkey. The data set was descriptively analyzed through four main periods identified on the basis of changing COVID-19 pandemic regulations and implementations in Turkey. Average rent prices of Turkish provinces during the identified periods were compared using ArcGIS 10.6. to show how private rent prices changed during the pandemic. The findings demonstrated that the unit rent prices generally increased from March 2020 to December 2021 throughout the whole country. Furthermore, the findings highlighted that while metropolitan cities have the highest unit rent price, the highest rent price rise occurred in provinces located in Central and Eastern Anatolia. This study contributes to the literature on how sudden shocks such as pandemics affect rent prices in free rental markets. In addition, it shows how the impacts of the COVID-19 pandemic on the rental housing market differ from country to country by revealing the increasing trends in Turkey.
Measuring the Value of Urban Consumption Amenities: A Time-Use Approach
SSRN Electronic Journal, 2019
Assessing the value of consumption amenities is faced with two challenges. First, because the value of local consumption amenities, such as restaurants, often extends to residents living beyond the immediate vicinity of the amenities, researchers must account for how the amenity bene…ts di¤use through space. Second, to evaluate how each type of amenity a¤ects each location's overall amenity value, researchers must identify residents' preferences for each of the amenity types. I present a model of amenity choice that micro-founds spatial di¤usion and amenity preferences. The model empirically links these features to visiting patterns, which are observable in the timeuse data. I demonstrate that correctly accounting for spatial di¤usion is important for accurately measuring consumption amenities'role in welfare inequality.
Assessing the Effects of COVID-19 on Accommodations Availabilities and Prices
HighTech and Innovation Journal
In 2020 a new pandemic, named COVID-19 has been spreading all over the world, causing a reduction of activities, including in the tourism sector. This paper tries to quantify the effects of COVID-19 on accommodations, with a particular focus on prices trend and accommodations availability. Experiments simulated more than 400 accommodation bookings over the period of time before, during and after the wave of the pandemic caused by COVID-19. The analysis is done for the city of Pisa, but it could be generalized to all the other cities, provided that there is an availability of data. The typology with the highest drop in availability was that of 2-star hotels with a maximum decrease of 66%. Even the 4 and 3-star hotels were clearly affected by the pandemic, recording maximum drops of 36% for 4-star hotels and 25% for 3-star hotels. Regarding the analysis of prices trend, the categories most affected by the pandemic were hotels, hostels and tourist villages, which recorded significant p...