Determinants of interstate differentials in the cost of housing, 2006

Abstract

This empirical study investigates determinants of interstate differentials in the cost of housing for the year 2006. While the literature on geographic cost-of-living differentials is well developed, the literature on geographic cost-of-housing (as opposed to housing-price) differentials is much less so. Housing costs consist of the price of housing per se for owners or rental payments per se for renters plus utility costs. The significance of this research is elevated by the fact that the cost of housing is the main driver of cost-of-living differences between states. The OLS results imply that the cost of housing in a state is positively a function of the state's median family income, its heating degree days, and its mean January temperature, and negatively a function of toxic waste releases in the state, the state's property crime rate, and the presence of right-to-work laws in the state.