Abstract
Residents, home buyers, planners, and elected officials have differing ideas about how much a home value is changed by potential increases in density due to new development or how much of a premium is placed on the seclusion afforded by lower-density neighborhoods or the amenities offered by higher-density neighborhoods. Existing literature largely only probes the nature of any relationship between home prices and population or residential density in a simple way and as a control for other possible relationships. Using a dataset provided by the Sacramento Association of Realtors that includes over 10,000 home sales in Sacramento County, California over three months in 2013 and four months in 2016, and neighborhood data from the U.S. Census Bureau, this study conducts a hedonic price estimate to test whether a quadratic relationship between home prices and population density exists, controlling for other home, neighborhood, and sales factors. The results indicate that home prices are higher in both dense urban neighborhoods and sparse rural neighborhoods than in middle-density suburban neighborhoods.