Amenity Values versus Land Constraints: The Spatial Effects of Natural Landscape Features on Housing Values

When local amenities are tied to natural land use features that cannot be developed for physical or regulatory reasons, the corresponding implicit price estimates from a hedonic housing model may reflect local supply constraints and confound estimation of natural amenity values. Using a spatial simultaneous equations model of housing values and migration, we examine whether local supply constraints from natural or preserved features have influenced the housing market. Results indicate that constraints associated with the presence of water bodies and some types of open space preservation have contributed to higher housing prices offsetting local demand for these natural amenities.