Housing market segmentation

Housing submarkets are typically defined as geographic areas where the price per unit of housing quantity (defined using some index of housing characteristics) is constant. This paper defines housing markets as geographic areas where (1) the price of housing (per unit of service) is constant and (2) individual housing characteristics are available for purchase. We examine housing market segmentation within metropolitan Dallas using hierarchical models and single-family property transactions over the 1995:1 through 1997:1 periods. We supplement the transaction data with information on elementary school student performance for public elementary schools. A demonstration of the technique using data for the Carrollton-Farmers Branch Independent School District suggests that the metropolitan Dallas housing market is segmented by the quality of public education las measured by student performance on standardized tests). We also conclude that hierarchical models provide a useful framework for delineating housing submarkets. Finally, while this paper examines single-family housing submarkets, the methodology could be adapted to other property types to delineate submarket boundaries for multifamily, office, retail, and industrial/warehouse properties. (C) 1998 Academic Press.