| The Journal of Real Estate Finance and Economics | |
| Volume 22, Issue 2&3, Article 4 (Abstract) | |
| Title: | Environmental Conditions, Reservation Prices, and Time on the Market for Housing |
| Author: | Ju-Chin Huang and Raymond B. Palmquist |
| Abstract: | A general analytical model to describe the impact of environmental disamenities on duration of sales is derived. A statistical technique to recover a seller's reservation price is proposed. An econometric procedure that consistently estimates market duration and a seller's reservation price is described. An application to the impact of highway noise on property values and market duration is presented. The estimation results show that, while highway noise has a significant negative impact on forming reservation prices and predicting sale prices, the noise effect on duration of sales is not statistically significant. Empirical evidence also shows a negative impact of market duration on reservation prices, which indicates an updating process for reservation prices over time. |
| Keywords: | Hedonic Method, Property Values, Environmental Disamenity, Market Duration, Reservation Price, Stochastic Frontiers |