Property Rights and Price Discovery in the Housing Market: Evidence from School Quality Capitalization

This paper applies meta-analysis of school quality capitalization estimates reported in the literature to examine the relationship between differences across US state approaches to protecting property rights and price discovery in housing markets. After controlling for possibly confounding influences from the housing supply elasticity and regional effects, the analysis shows that restricting local government powers of eminent domain for redevelopment is associated with house prices doing a better job conveying information about school quality differences across neighborhoods. While the property rights variables used here are narrowly defined, following previous literature, we argue they likely indicate the state’s broader approach to protecting private property rights in general.