1# RECORD d37971d97af2ef251a0da6b9c73ae5f307074e7d2# TITLE: Hedonic Analysis of Housing Prices Near the Portland Urban Growth Boundary, 1978-19903# YEAR: 1996.0 VENUE: nan DOI: 10.15760/etd.13444# AUTHORS: A. Alkadi5# PAGES: 127 CANDIDATE TABLE PAGES (1-based): [90, 91, 97, 104, 105]6# ABSTRACT: An abstract of the dissertation of Abdullah Alkadi for the Doctor of Philosophy in Urban Studies presented May 6, 1996. Title: Hedonic Analysis of Housing Prices near the Portland Urban Growth Boundary, 1978-1990. The cornerstones of Oregon's 1973 Senate Bill 100 are the preservation of farm, forest, and other resource lands and the containment of urban development within urban growth boundaries (UGB). The UGB is a boundary around each incorporated city containing enough land to meet projected needs until the year 2000. The Land Conservation and Development Commission (LCDC), charged with adopting and implementing state planning policy, sought to keep UGBs small enough to contain urban sprawl. To avoid the potential effects of land price inflation, LCOC allowed UGBs to include more land supply than the forecasted demand. The Portland-Metropolitan region was allowed to have a 15.3-percent surplus. Policy makers are unsure what effect UGBs have on housing costs. The common belief is that by restricting the amount of land available for residential construction the market drives prices up. Contrasting opinions suggest that by substituting low-density with high-density development, per-unit construction costs are lower, thus reducing the costs of owning a hom.e_. -------··. Efforts to dispel some of the mystery about the relationship between UGBs and housing prices are needed. The objective of this research is to provide empirical evidence of the relationship between the Portland-Metropolitan area's UGB and housing prices. The study uses a hedonic model to conduct a time-series analysis for the years 1978 to 1990 for Washington County. This study found no relationship between housing price and the imposition of the UGB. In fact, the rate of increase in price for single-family housing after UGB implementation was found to be much less than before. Proximity as measured by distance of sale to the UGB was the only variable that was associated with a higher rate of increase in housing prices. All of these results, with the exception of those related to proximity, were unexpected but may be explained by several factors: imposition of the Metropolitan Housing Rule in 1981, a severe recession during the 1980s, and excess land supply. These influences do not support a conclusion that UGBs lead to an increase in housing prices, at least prior to 1990, when the UGB did not constrain the789===== PAGE 1 (score 3, numeric-paren 0, table-words 0, var-words 3) =====1011Portland State University 12Portland State University 13PDXScholar 14PDXScholar 15Dissertations and Theses 16Dissertations and Theses 171996 18Hedonic Analysis of Housing Prices Near the 19Hedonic Analysis of Housing Prices Near the 20Portland Urban Growth Boundary, 1978-1990 21Portland Urban Growth Boundary, 1978-1990 22Abdullah Alkadi 23Portland State University 24Follow this and additional works at: https://pdxscholar.library.pdx.edu/open_access_etds 25Let us know how access to this document benefits you. 26Recommended Citation 27Recommended Citation 28Alkadi, Abdullah, "Hedonic Analysis of Housing Prices Near the Portland Urban Growth Boundary, 291978-1990" (1996). Dissertations and Theses. Paper 1345. 30https://doi.org/10.15760/etd.1344 31This Dissertation is brought to you for free and open access. It has been accepted for inclusion in Dissertations 32and Theses by an authorized administrator of PDXScholar. Please contact us if we can make this document more 33accessible: pdxscholar@pdx.edu. 343536===== PAGE 90 (score 34, numeric-paren 17, table-words 5, var-words 6) =====373875 39implementation of the UGB), and the UGB variable was eliminated to 40allow for perfect comparison. Table II shows the regression results. 41TABLE I 42MULTIPLE REGRESSION FOR PRICE AS A DEPENDENT VARIABLE (SAMPLE 43PERIOD BEFORE AND AFTER THE UGB) 44Variable 45Coefficient 46T-Score 47UGB 48-20583 49-8.4*** 50AGE 51-290 52-7.2*** 53BEDROOM 541781 552.1** 56BATHROOM 577836 587.8*** 59GARAGE 603312 611.9* 62FIREPLACE 63551 640.6 65INTRATE 663653 678.1 *** 68DCBD 69-0.23 70-4.5*** 71DSCH 721.39 733.7**'" 74DUGB 75-0.68 76-4.8*** 77DREC 780.57 791.6* 80DHWYS 81-0.28 82-2.9*** 83DEMP 84-0.11 85-1.2* 86CRIME 87-8370 88-4.9*** 89EDUCATION 901.5 911.4* 92TIME 93-18.1 94-0.6 95TIME*LOTSIZE 960.0015 973.5*** 98TIME"SQFT 990.207 10022.7*** 101Constant 10234866 1033.9*** 104Multiple R2 1050.53 106Sample Size 1072269 108.. 109Sigmficant at 0.05 level (one-tmled) 110Significant at 0.05 level (two-tailed) 111*** 112Significant at 0.01 level (two-tailed) 113* 114** 115The regression results show that all the independent variables 116jointly explained 52, 62, and 53 percent of the variation in sale prices of 117homes sold before and after, on!y before, Hand only after the 118implementation of the UGB, respectively. 119120121===== PAGE 91 (score 56, numeric-paren 40, table-words 4, var-words 6) =====122123TABLE II 124MULTIPLE REGRESSION FOR PRICE AS A DEPENDENT VARIABLE (SAMPLE 125PERIOD BEFORE AND AFTER THE UGB) 126Variable 127Before-After UGB 128Before UGB 129Coeff. 130T-Score 131Coeff. 132AGE 133-287 134-7.0*** 135-140 136BEDROOM 1371754 1382.0** 139149 140BATHROOM 1417695 1427.6*** 14311589 144GARAGE 1453001 1461.7* 1471741 148FIREPLACE 149502 1500.5 151-1628 152INTRATE 1531884 1544.6*** 155-430 156DCBD 157-0.23 158-4.4*** 159-0.11 160DSCH 1611.3 1623.5*** 1630.6 164DUGB 165-0.67 166-4.7*** 167-0.50 168DREC 1690.61 1701.7* 1710.39 172DHWYS 173-0.26 174-2.7*** 175-0.43 176DEMP 177-0.09 178-1.0* 1790.25 180CRIME 181-6560 182-3.8*** 183-1240 184EDUCATION 1851.5 1861.4* 1871.8 188TIME 189-188 190-8.7*** 191-461 192TIME*LOTSIZE 1930.0015 1943.6*** 1950.013 196TIME*SQFT 1970.207 19822.4*** 1990.547 200Constant 20148478 2025.5*** 20351125 204Multiple R2 2050.52 2060.62 207Sample Size 2082269 209335 210.. 211Significant at 0.05 level (one-tailed) 212Significant at 0.05 level (two-tailed) 213*** 214Significant at 0.01 level (two-tailed) 215** 216T-Score 217-1.9* 2180.1 2196.9*** 2200.6 221-0.9 222-0.3 223-1.4* 2240.3 225-2.1** 2260.6 227-2.9*** 2281.6 229-0.5 2301.1* 231-1.4 2326.0*** 2336.6*** 2343.3*** 235After UGB 236Coeff. 237T-Score 238-341 239-7.6*** 2401222 2411.2* 2426277 2435.5*** 2443820 2451.9* 246726 2470.7 2484454 2495.7*** 250-0.23 251-4.0*** 2521.3 2533.3*** 254-0.65 255-4.1*** 2560.64 2571.6* 258-0.27 259-2.5*** 260-0.15 261-1.5* 262-10326 263-3.4*** 2640.87 2650.6 26611 2670.3 2680.0013 2692.9*** 2700.217 27121.9*** 27211892 2730.7 2740.53 2751934 27676 277Comparing the three regressions, it is obvious that some 278variables became significant after the implementation of the UGB 279while others did not. 280Although the coefficients of DUGB are 281significant before and after the implementation of the UGB at a level 282of .05 and .01, respectively, the coefficient after the implementation of 283the UGB is higher than before the UGB was implemented, a finding 284which is consistent with the theoretical literature (Correll et al. 1978; 285Nelson 1984). In particular, the coefficients of DUGB suggest that a 286house close to the UGB after it was implemented will lose $0.65 for 287288289===== PAGE 92 (score 8, numeric-paren 0, table-words 2, var-words 4) =====29029177 292every foot of distance from the UGB while the value before the 293implementation was $0.50 for every foot of distance. It must be kept in 294mind, however, that the period after the UGB was implemented 295experienced a severe depression. 296Thus, the $0.65 could be 297underestimated. When looking to the rate of increase it is clear that a 298house sold after the UGB was implemented captured a higher rate of 299increase, but it is not that high compared to the rate of increase before 300the UGB was implemented. In particular, due to DUGB, a house after 301the UGB was implemented captured 0.00080 percent of the house 302value for every single foot it gets closer to the UGB versus 0.00071 303before the UGB was implemented. 304Nevertheless, it could also be argued that the DUGB before the 305implementation of the UGB was significantly sizable, due to the fact that 306participants in the land market feared a stringent UGB and its 307consequences and were unsure of the final lines of the UGB, drafted 308before October 1980. In fact, the date of line demarcation goes back to 1977 309and that is how Knaap (1982) found some effects of the UGB on land 310values when he studied the Portland metropolitan area. 311Based 312on 313the 314coefficients 315of 316the 317two 318interactions, 319TIME*LOTSIZE and TIME*SQFT, as shown in Table II, the real 320implicit price trends in house value can be calculated for each period. 321The coefficients of the interactions show the price increment of one 322square foot in LOTSIZE and SQFT. Multiplying these coefficients with 323the average size of LOTSIZE and SQFT in a certain period would 324reveal the real implicit price of an average LOTSIZE per month, as the 325TIME variable was measured in a one-month increment. 326In 327particular, the average LOTSIZE _Q_tJring_the __ J>erio_d after UGB was 32811,827 square feet. Multiplying the coefficient outcome for the same 329variable during the same period reveals $15. This is the increment in 330331332===== PAGE 97 (score 49, numeric-paren 34, table-words 3, var-words 6) =====33333482 335compared to the preceding and following periqds. In fatt, this is not 336unexpected, as the results are consistent with the depression that 337occurred in the Portland ~lousing market duri1;1g the period between 3381983-1985. 339TABLE IV 340MULTIPLE REGRESSION FOR PRICE AS A DEPENDENT VARIABLE (SAMPLE 341PERIOD AFTER THE UGB) 342I 343Variable 3441980-1982 3451983-1985 346Coef. T-Score 347Coef. T-Score 348AGE 349-442 350-2.1** 351-160 352-1.6* 353BEDROOM 354-3308 -0.8 3557194 3563.1*** 357BATHROOM 35815800 3593.1*** 3604280 3611.7* 362GARAGE 363-10106 -1.2 3643077 3650.7 366FIREPLACE 3673107 3680.7 3692058 3700.8 371INTRATE 372-2155 -0.6 3732459 3740.6 375DCBD 3760.09 3770.3 378-0.17 379-1.4* 380DSCH 3812.4 3821.4* 3830.6 3840.7 385DUGB 3860.1 3870.2 388-0.35 389-0.9 390DREC 391-0.9 392-0.6 393O.Dl 3940.01 395DHWYS 396-0.09 397-0.2 398-0.07 399-0.2 400DEMP 4010.003 4020.00 4030.004 4040.01 405CRIME 406-25861 -0.8 407-103321 -2.0** 408EDUCATION 409-0.1 410-0.03 411-0.9 412-0.3 413TIME 414-945 415-1.2 41667.4 4170.2 418TIME*LOTSIZE 4190.009 0.8 420-0.002 -2.4*** 421TIME*SQFT 4220.465 4234.7••• 4240.224 4257.1*** 426Constant 427146284 1.4* 428189726 2.3** 429Multiple R2 4300.50 4310.41 432Sample Size 433178 434400 435.. 436Significant at 0.05 level (one-tailed) 437Significant at 0.05 level (two-tailed) 438••• 439Significant at 0.01 level (two-tailed) 440* •• 4411986-1987 442Coef. T-Score 443-29$ 444-2.9*** 445689() 4463.2*** 447646$ 4482.7*** 449353,5 4500.7 451-2194 -1.0 4526537 4530.9 454-0.3 455-2.4 .... 4560.6 4570.7 458-0.8~~ 459-2.8*** 4600.54 4610.6 462-0.28 463-1.3* 464-0.1 465-0.6 466-1947 -0.04 4675.3 4681.8* 469371 4700.8 4710.00~ 4722.4*** 4730.16;~ 4747.6*** 475-7341)4 -0.5 4760.47 477459 4781988-1990 479Coef. T-Score 480-488 481-8.5*** 482-5261 483-3.8*** 4844855 4853.1*** 4865586 4872.1** 488988 4890.7 490-10566 -4.0*** 491-0.26 492-3.2*** 4931.2 4942.1** 495-0.68 496-2.0*** 4971.3 4982.4*** 499-0.37 500-2.5*** 5010.2 5021.4 503-1920 -0.2 504' 0.5 5050.2 506I 768 5073.6*** 508I 0.002 5094.2*** 5100.252 51121.5*** 51245390 1.1* 513I 0.67 514i 897 515However, the four regressions show that all the independent 516variables jointly explained 50, 41, 47, and 67 percent of all the 517variations in sale prices of homes sold after UGB implementation and 518519520===== PAGE 98 (score 9, numeric-paren 0, table-words 3, var-words 2) =====52152283 523between the periods 1980-1982, 1983-1985, 1986-1987, and 1988-1990, 524respectively. 525The interactive eff~cts of LOTSIZE*TIME and SQFT*TIME are 526consistent with previous theoretical predictions. 527All of their 528coefficients are significant at least at the .01 level except for 529TIME*LOTSIZE for the period between 1980-1982, which is not 530significant. 531Based on earlier discussion of the coefficients of the two 532interactions TIME*LOTSIZE and TIME*SQFT, the real implicit price 533trends of the price of a house when looking at the components of 534LOTSIZE and SQFT are summarized in Table V and Figure 14. 535LOTSIZE and SQFT fluctuated and SQFT decreased during the two 536periods followed the first one and then picked up. LOTSIZE followed 537a zigzag pattern decreasing and increasing and then decreasing again. 538TABLE V 539REAL IMPLICIT PRICE TRENDS (IN $) PER MONTH DUE TO LOT SIZE AND 540HOUSE IMPROVEMENTS FOR THE PERIODS AFTER THE UGB 5411980-1982 5421983-1985 5431986-1987 5441988-1990 545Value 546% 547Value 548% 549Value 550o/o 551Value 5520/o 553TOTAL 554865 5551.09 556361 5570.49 558321 5590.42 560482 5610.53 562LOTSIZE 56374 5640.09 565-32 566-0.04 56733 5680.04 56926 5700.03 571SQFT 572791 5731.0 574393 5750.53 576288 5770.38 578456 5790.50 580In particular, during the period between 1983-1985, both 581interactions 582TIME*LOTSIZE 583and 584TIME*SQFT 585obtained 586lower 587coefficients compared to the preceding period. 588Again, this was 589expected due to the depression thafoccurredduring this period. What 590is interesting 591is 592that during 593the 594period of 1986 and 1987 595TIME*LOTSIZE picked up in its coefficient while TIME*SQFT became 596597598===== PAGE 104 (score 56, numeric-paren 42, table-words 3, var-words 6) =====599600TABLE VI 601MULTIPLE REGRESSION FOR PRICE AS A DEPENDENT VARIABLE (SAMPLE 602PERIOD BEFORE AND AFTER THE UGB) 603Variable 604Before-After UGB 605Before UGB 606Coeff. 607T-Score 608Coeff. 609AGE 610-323 611-7.7*** 612-173 613BEDROOM 6141849 6152.1** 616620 617BATHROOM 6187587 6197.5*** 62010512 621GARAGE 6222630 6231.4* 6242280 625FIREPLACE 626513 6270.5 628-296 629INTRATE 6301915 6314.7*** 632-1345 633DCBD 634-0.22 635-4.2*** 636-0.13 637DSCH 6381.2 6393.3*** 6401.3 641DUGB 642-0.67 643-4.7*** 644-0.62 645DREC 6460.48 6471.3* 6480.33 649DHWYS 650-0.26 651-2.7*** 652-0.43 653DEMP 654-0.1 655-1.1 * 6560.17 657CRIME 658-6464 659-3.7*** 660-2841 661EDUCATION 6621.7 663! 6641.5* 6651.5 666TIME 667-173 668-8.0*** 669-203 670TIME* LOT ANfT 67175 672I 6735.3*** 674506 675TIME*SQFT 6760.204 67722.1*** 6780.587 679Constant 68048302 6815.5*** 68261092 683Multiple R2 6840.52 6850.60 686Sarnele Size 6872269 688335 689. ' .. 690S1gmficant at 0.05 level (one-tailed) 691Significant at 0.05 level (two-tailed) 692*** 693Significant at 0.01 level (two-tailed) 694** 695T-Score 696-2.2** 6970.4 6986.1 *** 6990.8 700-0.1 701-0.9 702-1.5* 7031.9* 704-2.5** 7050.5 706-2.8*** 7071.2* 708-1.2* 7090.9 710-0.6 7114.3*** 7126.9*** 7133.8*** 714After UGB 715Coeff. 716T-Score 717-390 718-8.5*** 7191335 7201.3* 7216229 7225.5*** 7233320 7241.6* 725686 7260.7 7274644 7286.0*** 729-0.22 730-3.8*** 7311.2 7323.0*** 733-0.63 734-4.0*** 7350.48 7361.2* 737-0.27 738-2.5*** 739-0.16 740-1.5* 741-9765 742-3.2*** 7431.1 7440.8 74534 7460.9 74777 7485.3*** 7490.211 75021.5*** 7518014 7520.4 7530.53 7541934 75589 756The coefficients for TIME*LOTAMT, the interaction variable, 757are significant during the three periods following 1982, and, in fact, for 758these three periods, the level of significance went up as time 759proceeded, to the .05 level (one-tail), .05 level (two-tail), and 0.01 level 760(two-tail), 761re~pectively. i The magnitudes of the coefficients also 762increased as Hme pasc::ed 763A honse ~~ a---largeHlot-during 1983-1985 764captured $58 per month, $66 per month during 1986-1987, and $75 per 765month during 1988-1990; This implies that larger lots got more scarce 766767768===== PAGE 105 (score 49, numeric-paren 34, table-words 3, var-words 6) =====76977090 771as time passed especially since the UGB prevented any inclusion of 772raw land since October 1980. Further details show that a house located 773on a large lot captured att increase of $6,372 between 1983 and 1990. 774However, when looking at the rate of the increase in LOTAMT price, 775the analysis shows that the rate was increasing until the last period, 776where the rate dropped. In particular, the rate was 0.025, 0.079, 0.088, 777and 0.083 percent, respectively. 778TABLE VII 779MULTIPLE REGRESSION FOR PRICE AS A DEPENDENT VARIABLE (SAMPLE 780PERIOD AFTER THE UGB WAS IMPLEMENTED) 781Variable 7821980-1982 7831983-1985 7841986-1987 785Coef. T-Score 786Coef. T-Score 787Coef. T-Score 788AGE 789-390 790-1.8* 791-216 792-2.1" 793-293 794-2.8*** 795BEDROOM 796-3127 -0.8 7978005 7983.5*** 7997115 8003.3*** 801BATHROOM 80215922 8033.1 *** 8044514 8051.8* 8066743 8072.8*** 808GARAGE 809-9105 810-1.1 8112150 8120.5 8135137 8141.1* 815FIREPLACE 8163358 8170.8 8181226 8190.5 820-2054 -0.9 821INTRATE 822-2334 -0.7 8231925 8240.4 8256816 8260.9 827DCBD 8280.08 8290.3 830-0.21 831-1.6* 832-0.3 833-2.3** 834DSCH 8352.7 8361.6* 8370.03 838O.Q3 8390.6 8400.7 841DUGB 8420.1 8430.1 844-0.35 845-0.9 846-0.8 847-2.7*** 848DREC 849-0.9 850-0.6 8510.14 8520.16 8530.59 8540.7 855DHWYS 856-0.1 857-0.2 858-0.07 859-0.3 860-0.27 861-1.2* 862DEMP 863-0.001 -0.00 8640.05 8650.2 866-0.1 867-0.6 868CRIME 869-23783 -0.7 870-104495 -2.0** 871-1269 872-0.02 873EDUCATION 874-0.4 875-0.09 876-0.9 877-0.3 8785.1 8791.7* 880TIME 881-822 882-1.1 88381 8840.2 885417 8860.9 887TIME*LOT AMT 88820 8890.1 89058 8911.3* 89266 8932.2** 894TIME*SQFT 8950.481 8964.8*** 8970.179 8986.0*** 8990.159 9007.4*** 901Constant 902139224 9031.4* 904203406 2.4*** 905-83479 -0.5 906Multiple R2 9070.49 9080.41 9090.47 910Sample Size 911178 912400 913459 914* 915.. 916** 917Sigmficant at 0.05 level (one-tmled) 918Significant at 0.05 level (two-tailed) 919*** 920Significant at o~oriev·er (two=tailed) _________ . 9211988-1990 922Coef. T-Score 923-529 924-8.9*** 925-4814 926-3.5*** 9274276 9282.8"** 9294801 9301.8* 931835 9320.6 933-10200 -3.9*** 934-0.24 935-3.1 **" 9361.1 9372.0** 938-0.72 939-3.2*** 9401.1 9412.0** 942-0.39 943-2.7*** 9440.2 9451.5 946-130 947-0.01 9480.5 9490.3 950811 9513.8*** 95275 9534.5*** 9540.250 95521.4*** 95635436 0.9 9570.67 958897 959960961===== PAGE 106 (score 3, numeric-paren 0, table-words 0, var-words 3) =====96296391 964SUMMARY 965By exploring the relationship between housing prices and the 966UGB, it was found that the UGB did not affect housing prices. In 967particular, the increased rate in the value of the LOTSIZE was much 968lower during the period after the UGB was implemented compared to 969the period before the UGB. 970In addition, during the period after the UGB was implemented, 971the rate of increase in lot size is almost flat. This low rate could be 972attributed to the ample amount of land supplied within the UGB as 973this analysis studied only up to the midpoint of the designated period. 974The analysis showed an overall increase in the rates of the 975value of LOTAMT during the three periods following the UGB 976implementation, while the rate decreased at the fourth period. Large 977lots did capture higher values as time passed compared to small lots, 978but the rate of increase during the period after the UGB was 979implemented was much lower compared to the period before the UGB 980was implemented. 981Finally, it has been demonstrated that proximity to the UGB 982was seen as an amenity and that housing prices do decline as they get 983away farther from the UGB. 984------· 985-· ··--------··. 986---·---------------987