Determinants of Interstate Differentials in the Real Median Price of Single Family Homes

This empirical study investigates determinants of interstate real median home price differentials for the year 2005. While the literature on geographic cost-of-living differentials is well developed, the literature on geographic housing price differentials is much less so. Given the relatively large impact of housing prices on overall living costs, this research seeks to address this issue and shed light on specific factors influencing the real median price of housing across states. The ordinary least squares results imply that the real median price of a single-family home in a state is positively a function of the state's population growth rate, its per capita income, and its relative amount of shoreline on major bodies of water, and negatively a function of toxic waste releases in the state, the state's geographic area, and the presence of right-to-work laws in the state.