Golf courses and home values in California’s Central valley

Abstract

Purpose The purpose of this study is to examine the net effect of golf courses’ proximity on home sale prices in Kern County, California. Design/methodology/approach A spatial Durbin error model is used with sales price data for 1,693 homes sold in Kern County in the third quarter of 2018. This paper compares 90 different spatial econometric models using Bayesian techniques to produce posterior model probabilities which guided model selection and the number of neighbors to use. Findings The results show that significant spatial dependence exists in home values in Kern County. Point estimates indicate that homes abutting golf courses are valued at less than those which are not. This study also finds that the farther away from golf courses the average home is, the higher its value. Originality/value This study contributes to the existing literature in three dimensions. First, this paper analyzes whether proximity to golf courses impacts home values in Kern County where a study of this nature has not been conducted. Second, the analysis uses transaction data for 2018 which was a period when the sport’s popularity was fading and golf courses closing. Third, Bayesian model comparison techniques are used to select the appropriate model.