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Neighborhoods, Race, and the Twenty-first-century Housing Appraisal Industry

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Abstract

The history of the U.S. housing market is bound up in systemic, explicit racism. However, little research has investigated whether racial inequality also persists in the contemporary appraisal industry and, if present, how it happens. The present article addresses this gap by centering the appraisal industry as a key housing market player in the reproduction of racial inequality. Using a census of all single-family tax-appraised homes in Harris County (Houston), Texas, the authors examine the influence of neighborhood racial composition on home values independent of home characteristics and quality; neighborhood housing stock, socioeconomic status, and amenities; and consumer housing demand. Noting that substantial neighborhood racial inequality in home values persists even when these variables are accounted for, the authors then use ethnographic and interview data to investigate the appraisal processes that enable this inequality to continue. The findings suggest that variation in appraisal methods coupled with appraisers’ racialized perceptions of neighborhoods perpetuates neighborhood racial disparities in home value. The authors conclude with suggestions for future research and policy interventions aimed at standardizing the appraisal process.

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... The study of racial housing inequality spans decades of research and incorporates life course/human capital and systemic racism theories to explain persistent inequalities (Alba and Logan 1992;DeSilva and Elmelech 2012;Howell and Korver-Glenn 2018;Korver-Glenn 2018;Molina 2017). Previous research finds that human capital and life course characteristics are positively related to homeownership and higher home values (Alba and Logan 1992;DeSilva and Elmelech 2012;Tesfai 2016), yet are constrained by a historically racist housing market and racist policy (Feagin 2006;Fernandez-Kelly 2015;Rothstein 2017). ...
... For example, guidelines for mortgage lending by the HOLC specifically excluded Black neighborhoods. Today, home sellers, buyers, and real estate actors continue to consider the racial composition of neighborhoods when assessing the values of homes so that majority-White neighborhoods are more likely to have houses of higher values (Anacker 2010;Flippen 2001;Howell and Korver-Glenn 2018). Thus, home values do not necessarily reflect "objective" assessments of the exchange value of a house but rather reflect the ways that these values are constructed within particular racial contexts. ...
... This relationship may be reflective of residence in large cities in the states mentioned above, where rentership is common. However, in line with the extant literature, the racial composition of neighborhoods is significantly related to housing values (Anacker 2010;Flippen 2001;Howell and Korver-Glenn 2018). That increases in the Black population are associated with lower home values reflects one of the major ways that housing values are socially constructed based on racist stereotypes about neighborhood desirability (Taylor 2019). ...
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Prior research finds that human capital may explain racial housing inequality, whereas others note the historical role that race played in creating unequal housing conditions. This study uses the case of Cubans in the United States to examine whether human capital explains Black–White housing inequalities, or if they are a result of nativity/cohort differences—a proxy for the federal policies that supported Cubans’ economic and social incorporation. Using pooled data from the American Community Survey, I examine how human capital characteristics and nativity/migration cohorts shape odds of homeownership and predicted home values among Cubans. Extended analyses using decomposition methods find that although human capital characteristics are important, they play a smaller role in explaining Black–White differences in homeownership and home values. Indicative of the changing structure of racial stratification in the United States, results reveal substantial inequality among the oldest of Cuban immigrants and U.S.‐born Cubans, despite a trend toward declining inequality among recent arrivals. Supported by the literature of systemic racism, the case of Cubans shows how human capital explanations do not sufficiently explain racial housing inequalities and how the future of racial stratification is one of inter‐ and intra‐ethnic group inequality.
... That year, the passage of the 1977 Community Reinvestment Act, together with its predecessors, including the 1968 Fair Housing Act, the 1974 Equal Credit Opportunity Act, and the 1975 Home Mortgage Disclosure Act, made the practice illegal. Appraisers dropped the use of explicit redlining, but continued using the "sales comparison approach," which remains the most common appraisal method used today (Howell and Korver-Glenn 2018). Using the sales comparison approach, appraisers select multiple recently sold homes in the same or a "comparable" neighborhood. ...
... Thus, neighborhoods with high concentrations of Black and Latinx residents are more likely to have higher levels of poverty, unemployment, vacancies, and renter-occupied dwellings. Appraisers negatively evaluate these socioeconomic status characteristics and lower appraised values accordingly (Howell and Korver-Glenn 2018). In other words, part of the neighborhood racial inequality in home values is due to persistent socioeconomic inequality across racial groups. ...
... Although working within a limited geographic scope and time frame, scholars who empirically examine real estate demand argue that this mechanism is unable to account for the remaining observed inequities (Howell and Korver-Glenn 2018). They suggest contemporary appraisal practices contribute to the observed inequalities in two ways. ...
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Beginning in the 1930s, neighborhood racial composition was an explicit determining factor in the evaluation of U.S. home values. This deliberate practice was outlawed in the 1960s and 1970s, but the correlation between neighborhood racial composition and home values persists. Using Census Bureau data from 1980 to 2015, the present study investigates the changing relationship between neighborhood racial composition and home appraisals, as well as the mechanisms that drive it. Contrary to what is often presumed, neighborhood racial composition was a stronger determinant of appraised values in 2015 than it was in 1980. Results suggest this is primarily due to contemporary appraising practices. Specifically, the use of the sales comparison approach has allowed historical racialized appraisals to influence contemporary values and appraisers’ racialized assumptions about neighborhoods to drive appraisal methods. These findings provide strong evidence that persistent racial inequality is driven in part by perpetual devaluing of communities of color and they suggest further regulation is required to foster equity.
... Predatory lending to these same segregated neighborhoods exacerbated racialized housing inequality (Taylor, 2019) and later underpinned the housing marking collapse during the Great Recession and Foreclosure Crisis (Massey et al., 2016;Rugh and Massey, 2010). Inequalities persist today with an increasing frequency of evictions (Desmond, 2016), appraisals (Howell and Korver-Glenn, 2018;Perry et al., 2018), and methods of upselling and steering (Besbris and Faber, 2017). ...
... However, Latinxs can also be racialized by others as a distinct racial group outside of whiteness/Blackness (Celia Olivia Lacayo, 2017;Genova, 2006), a complex process anchored in anti-Blackness itself (discussed below). In the home buying process, real estate actors rely on stereotypes related to citizenship, income, family composition, and financial knowledge to exclude prospective Latinx homebuyers and submit them to harsher, more predatory financing terms (Howell and Korver-Glenn, 2018). Racial identity and racialization are also a product of the racial contexts in which Latinx groups find themselves (Roth, 2012). ...
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In recent decades, the racial wealth gap has widened with extant literature reporting that Black and Latinx families hold fewer assets than white families. One such asset that receives substantial attention because of its wealth-generating principles is homeownership. Whereas intergroup homeownership inequalities are found throughout the literature, less is known about racialized inequality within groups. Latinxs provide a novel case for exploring how racialized homeownership inequality is structured within an ethnic group. Using data from the American Community Survey, we examine the odds of homeownership and predicted logged home values among Latinxs. We find that the association between race and housing outcomes varies substantially across Latinx groups. Drawing from theories of Latinx racial identity and the future of racial structures, we discuss the implications of our findings for understanding racial inequality among Latinx groups.
... Critical race scholars began creatively reshaping empirical methodologies by shifting away from studying racism as an individual phenomenon measured by stated beliefs to examining how implicit racial biases reinforce structural inequality (e.g., Emerson, Chai, & Yancey, 2001;Howell & Emerson, 2018;Howell & Korver-Glenn, 2018;Korver-Glenn, 2018;Krysan, Couper, Farley, & Forman, 2009;Krysan, Farley, & Couper, 2008;Pager, 2003;Royster, 2003). Likewise, scholars problematized the presumption of Whiteness as the norm (McKee, 1993;Seamster, 2015;Turner, 1978;Winant, 2007). ...
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Ethnographic and quantitative studies of urban neighborhoods have played an essential role in contrasting deeply held stereotypes, highlighting systemic injustices, and shaping federal urban policy. However, the majority of these studies focus on a small slice of the most marginalized urban neighborhoods, leaving much unknown about the vast majority of communities and how to address persisting inequality. This piece examines these empirical and theoretical shortcomings and proposes integrating critical theory into empirical studies of neighborhoods. This new theoretical approach has implications not only for how scholars conduct their research but also for how this research is applied in public policy. Suggestions for future studies and policy are discussed.
... Ethnicity-based housing inequality has been extensively studied in Europe and North America (DeSilva & Elmelech, 2012;Phillips & Harrison, 2010). In the U.S., Black people remain less likely to own homes and more likely to live in older, crowded, and structurally inadequate housing than White people (Bianchi et al., 1982;Howell & Korver-Glenn, 2018;De La Cruz-Viesca et al., 2018). Similarly, studies reveal housing inequality in China based on socio-economic profile and Hukou system (Chen, 2019;Huang & Jiang, 2009;Wang & Murie, 2000). ...
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... These analyses provide a basic description of where housing segregation is higher, but future research should examine the political, demographic, economic, or historical reasons some metropolitan areas have more spatially segregated housing stock than others in greater depth. Established income or racial segregation may be one reason if it begets the construction of housing catering to populations in certain neighborhoods or influences inequality in housing costs (Howell and Korver-Glenn 2018). Housing segregation in turn perpetuates future residential segregation. ...
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... For example, alongside the aforementioned work (Hackworth, 2019;K. Y. Taylor, 2019), Howell and Korver-Glenn (2018) argue, variation in housing appraisal methods coupled with racialized perceptions of neighborhoods perpetuate neighborhood racial disparities in home values. Part of their discussion focuses on how policy interventions, such as the Fair Housing Act, did nothing to address previous forms of economic exploitation. ...
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Dietary pattern of households is known to have a strong relationship with the quality of life and food items consumed by household members. Lack of access to a diversified diet has been recognized as the main problem among households with low income with attendant nutritional problems. This study examined the household dietary diversity among low-income urban households in Nigeria using the 2015/2016 Living Standard Measurement Survey. Data were analysed using principal component analysis, descriptive statistics and probit regression model. None of the households had adequate dietary diversity. Most of the household heads were within their economically active age range of thirty-one and sixty-four years and ate very low diverse diets (79.8%). Male-headed households also represented a higher percentage (94.9%) of low dietary diversity group. Despite the fair quality of the wall, floor and roofing materials, the urban households had a very low dietary diversity. Further, high dependency ratio reduced the probability of falling into low dietary diversity while access to portable water and having a home garden improved it.
... Third, under ly ing and intersecting with these pro cesses, groups' pref er ences create and uphold racial res i den tial seg re ga tion (Clark 1991). White peo ple's stated and revealed pref er ences for White neigh bors are well-documented, with evi dence showing that White res i dents view Black neigh bors as the most unde sir able, after Asian and His panic neigh bors (Charles 2000;Emerson et al. 2001;Farley et al. 1997;Howell and Korver-Glenn 2018). Black, His panic, and Asian house hold ers, in con trast, pre fer more racially diverse areas (Charles 2000;Krysan and Farley 2002). ...
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... On the contrary, scholarship on segregation and spatial dynamics suggests that race continues to shape land values, housing patterns, and reinvestment in ongoing ways that should be examined within studies of gentrification (Charles, 2003;Hall et al., 2015;Riddick, 1996). Indeed, studies finding that race shapes even the appraisal process would suggest that a rise in property values is indeed linked inextricably with race (Howell & Korver-Glenn, 2018). Stemming from this, I argue that urban studies must take seriously the social constructivist perspective of race and not throw race into analyses simply because it is standard practice. ...
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... By pointing to police inefficacy in Cleveland and police efficacy in Rocky River and Lakewood, these respondents American Journal of Sociology perform the cognitive sorting process that the racial preferences literature assumes is explicit and conscious but without overtly mentioning race or class-a key technique in the social construction of whiteness (Frankenberg 1993;Garner 2007;Bonilla-Silva 2018). Extant literature has cataloged similarly racially coded discussion or assessment of neighborhood quality and schools (Harris 2001), crime (Quillian and Pager 2001; see also Meyerhoffer 2016), property values (Harris 1999;Howell and Korver-Glenn 2018), and public housing (Duke 2010), but not policing. The use of located institutions as proxies for race and class composition is likely central to their commodification. ...
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Almost a decade ago, the Kerner Commission warned that this country was moving toward two societies—one white and one black. Data on residential segregation indicate clear-cut boundaries for these two societies—large cities are becoming black but most suburban areas remain white. Detroit is a case in point and this led the 1976 Detroit Area Study to investigate the sources of racial residential segregation. Our approach was guided by three hypothesized causes of this segregation: (i) the economic status of blacks, (ii) the preference of blacks to be with their own kind, and (iii) the resistance of whites to residential integration. We developed several new measurement techniques and found that most evidence supported the third hypothesis. Blacks in the Detroit area can afford suburban housing and both blacks and whites are quite knowledgable about the housing market. Most black respondents expressed a preference for mixed neighborhoods and are willing to enter such areas. Whites, on the other hand, are reluctant to remain in neighborhoods where blacks are moving in and will not buy homes in already integrated areas. This last result has been overlooked by traditional measures of white attitudes toward residential integration but emerges clearly with the new measure.
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Analysis of change in diversity and segregation in the Houston Metropolitan area. Joint project between Kinder Institute for Urban Research and the Hobby Center for the Study of Texas
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Sociology is a discipline in which the idea of a multi-method research design has held credence for many years, far before the term mixed methods research was coined. This article charts the implementation and framing of this approach over time to better understand the place and state of mixed methods research in the discipline today. Several recent applications of mixed method research by sociologists are highlighted to demonstrate the range of projects being conducted. There are challenges to further development of mixed methods inquiry within Sociology; however, the current epistemological base of the approach—pragmatism—promotes the merits of a variety of theoretical and methodological approaches and the discipline is better for it.
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To understand the persistence of racial disparities across multiple domains (e.g., residential location, schooling, employment, health, housing, credit, and justice) and to develop effective remedies, we must recognize that these domains are reciprocally related and comprise an integrated system. The limited long-run success of government social policies to advance racial justice is due in part to the ad hoc nature of policy responses to various forms of racial discrimination. Drawing on a systems perspective, I show that race discrimination is a system whose emergent properties reinforce the effects of their components. The emergent property of a system of race-linked disparities is über discrimination—a meta-level phenomenon that shapes our culture, cognitions, and institutions, thereby distorting whether and how we perceive and make sense of racial disparities. Viewing within-domain disparities as part of a discrimination system requires better-specified analytic models. While the existence of an emerg...
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The study of housing has a long history in sociology, but after the 1970s, it has been relatively hidden within and across a number of sociological subfields, and scattered across a range of disciplines. The financial crisis of 2008 elevated housing issues to national and international debate and protest, and offers a framework for organizing the scholarship on housing into that which studies housing as a commodity, on one hand, and as a right, on another. In the former category, I review the literature on mortgage financing; property values and wealth; and affordable rental housing, foreclosures, and evictions. In the latter category, I discuss the theoretical arguments for a right to housing and review the research on activist demands for that right. The tension between these two aspects of housing is discussed throughout. I conclude by proposing the actual home or apartment as a productive area for new sociological analysis. Expected final online publication date for the Annual Review of Sociology Volu...
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 Racial and ethnic inequality has manifested itself in wealth ownership and access to quality housing. Home ownership is considered a good basis on which to build equity. Whereas property values and their appreciation have been analyzed in those inner city neighborhoods that have high proportions of racially and ethnically underrepresented groups, not much systematic research has been undertaken on these issues in homogeneous versus mixed-race suburbs. By analyzing census tracts within select counties across the United States with weighted least squares (WLS) regressions, this article investigates differences among suburban census tracts in terms of several factors, including property values and their appreciation rates and factors, that have influenced property values. Based on the results, it is concluded that the assumption that home ownership in the suburbs leads to the building of housing wealth needs to be differentiated.
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Wealth inequality, particularly in housing, has received increased attention in recent years for its importance to racial and ethnic stratification. Yet, while we know a fair amount about black-white wealth inequality, many questions remain regarding sources of Hispanic asset inequality. This article addresses this gap by examining racial and ethnic inequality in homeownership and housing equity among the pre-retirement population. Results support a stratification perspective of inequality for both blacks and Hispanics; even after accounting for numerous life-cycle, resource, and social-psychological considerations, blacks and Hispanics continue to lag significantly behind whites in housing wealth. While Hispanics initially appear better off than blacks with respect to housing, this is largely a function of their more favorable family structure. Important differences between blacks and Hispanics in the main contributors to housing inequality highlight the need to take a more multiethnic perspective on wealth stratification.
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This article, presented at Brooklyn Law School’s 2009 Sparer Public Interest Law Symposium on a panel entitled Stopping the Next Subprime Crisis, is part of a larger project of information and strategy-sharing among academics, policy analysts and attorneys involved in foreclosure and predatory lending prevention. The article marshals and analyzes evidence of discriminatory and deceptive marketing practices by subprime mortgage lenders and brokers. It also supports current proposals for policy reforms that could address the misuse of new marketing technologies in this context.
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It is widely believed that home ownership is an important part of the American dream. It signifies the stability and prosperity of the homeowner's life. Also well known is that home equity is the single largest asset for most households in the United States. For example, analyzing the Survey of Consumer Finances of 1998 data, Kennickell et. al. (1999) report that 55 per cent of the total household net worth is in the form of the primary residence and that the median net worth of homeowners in the U.S. is $132,000, whereas that of renters is a meager $45,000. However, there is a substantial gap in achieving the American dream of homeownership across racial groups. Homeownership rates of black and Hispanic households have been more than 20 percentage points below than that of white households for more than 20 years. Although some of the differences in homeownership rates across races can be explained by the differences in socio-economic characteristics of the various racial groups, different house price appreciation rates in different racial neighborhoods should account for some of these differences. For example, if a household lived in a neighborhood where home prices do not appreciate very much compared to other neighborhoods, they would be less likely to own a home. In this paper, we provide strong empirical evidence that the neighborhoods that are heavily resided in by racial minorities experience low appreciation rates in the long run. It is estimated that the racial premium of all-white neighborhood compared to all-minority neighborhood is about 3 percent per year.
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While urban parks are generally considered to be a positive amenity, past research suggests that some parks are perceived as a neighborhood liability. Using hedonic analysis of property data in Baltimore, MD, we attempted to determine whether crime rate mediates how parks are valued by the housing market. Transacted price was regressed against park proximity, area-weighted robbery and rape rates for the Census block groups encompassing the parks, and an interaction term, adjusting for a number of other variables. Four models were estimated, including one where selling price was log-transformed but distance to park was not, one where both were log-transformed, a Box–Cox regression, and a spatially adjusted regression. All results indicate that park proximity is positively valued by the housing market where the combined robbery and rape rates for a neighborhood are below a certain threshold rate but negatively valued where above that threshold. Depending on which model is used, this threshold occurs at a crime index value of between 406 and 484 (that is, between 406% and 484% of the national average; the average rate by block group for Baltimore is 475% of the national average). For all models, the further the crime index value is from the threshold value for a particular property, the steeper the relationship is between park proximity and home value.
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We use longitudinal data from the Panel Study of Income Dynamics, data from three U.S. censuses, and techniques of spatial data analysis to examine how the composition of extralocal areas - those areas surrounding a householder's neighborhood of residence - affect the likelihood that whites will move out of their neighborhood. Net of the influence of local neighborhood conditions and other predictors of residential mobility, high concentrations of minorities in surrounding neighborhoods reduce the likelihood that white householders will move, presumably by reducing the attractiveness of the most likely residential alternatives. This effect suppresses the influence of the racial composition of the immediate neighborhood so that controlling for extralocal conditions provides substantially greater support for the white flight thesis than has previously been observed. We also find that recent growth in the size of the extralocal minority population increases the likelihood of white out-migration and accounts for much of the influence previously attributed to racial change in the local neighborhood. Finally, high levels of minority concentration in surrounding neighborhoods exacerbate the positive effect of local minority concentration on white out-migration. These results highlight the importance of looking beyond reactions to local racial conditions to understand mobility decisions and resulting patterns of segregation.
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The purpose of this paper is to examine black-white differences in housing appreciation in northern New Jersey, with particular emphasis on the communities of Montclair and Maplewood in the 1970 to 2000 period. We find that home appreciation at the block group level in these communities was inversely related to changes in the black population. The effect of changes in the proportion of the population that was black on home appreciation was similar to the effects of changes in black population at the census tract level in the northern New Jersey region as a whole. These high income communities with award winning school districts and well maintained housing stocks were not immune from the effects of race on home appreciation.
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Racial differences in the receipt of financial inheritances help to explain why the average difference in wealth between black and white households is larger than the average difference in income. Using data from a panel of prime-aged males and from a representative survey of the U.S. population, the authors document the greater likelihood of white households receiving an inheritance than black households. Controlling for other factors which contribute to racial differences in wealth, the authors estimate that financial inheritances may account for between 10 percent and 20 percent of the average difference in black-white household wealth. Copyright 1997 by Oxford University Press.
We empirically examine the role of appraisal in the residential mortgage lending process--in particular, the incidence, consequences, and determinants of appraisal below contract purchase price. Using the Boston Federal Reserve Study data set, we find that, as expected, low appraised value significantly increases the probability of mortgage loan application rejection. We find no evidence that low appraised value is related to census tract racial composition, an important finding given the history of the appraisal industry; however, low appraised value is related to proxies for neighborhood quality. Moreover, properties securing adjustable rate mortgages, condominiums, and properties purchased by African American buyers show an increased probability of low appraisal, though the race effect result is highly sensitive to model specification. Copyright 1998 by Kluwer Academic Publishers
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In an earlier paper, Goodman and Thibodeau [Journal of Housing Economics 7 (1998) 121] examined housing market segmentation within metropolitan Dallas using hierarchical models (Hierarchical Linear Models: Applications and Data Analysis Methods, Sage, Newbury Park, 1992) and single-family property transactions over the 1995:1–1997:1 periods. Their preliminary results suggested that hierarchical models provide a useful framework for delineating housing submarket boundaries and that the metropolitan Dallas housing market is segmented by the quality of public education (as measured by student performance on standardized tests). This paper examines whether delineating submarkets in the manner proposed by Goodman and Thibodeau improves hedonic estimates of property value. We include two additional housing submarket constructions in our evaluation: one using census tracts and one using zip code districts. Using data for 28,000 single-family transactions for the 1995:1–1997:1 period, we estimate hedonic house price equations for most of Dallas County as well as individually for each submarket. The parameters of the hedonic house price equations are estimated using a 90% random sample of transactions. The remaining observations are used to evaluate the prediction accuracy of the alternative housing submarket constructions. The empirical results indicate spatial disaggregation yields significant gains in hedonic prediction accuracy.
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