Housing Price Models for Essex County Massachusetts

This paper analyzes indicators of local median housing prices in the Essex County, Massachusetts area. The housing market is a significant sector of the United States economy and therefore it is important to develop models, which can predict and identify movements in their prices. This paper contains an overview of housing price indexes and provides a short overview of previous housing price studies. Two models, based on 2010 to 2015 data, are presented and analyzed. The specification of each model was driven by possible variables that might affect housing price and availability of data. For example a subset of communities, for the second model, were left out due to lack of available data for specific variables. Analysis of the broader sample indicates that median housing prices are positively related to the labor force, educational attainment, median income, travel time to work, the percent of the population female, where, through an interaction variable, travel time dampens the positive effect of the labor force on median housing prices. The second model shows that Math MCAS scores (standardized math test scores for 10th grade students), the over 65 population, the under 18 population, the percent of the population female are all positive indicators of median housing prices. The property crime rate is shown to be a negative indicator