El Paso Housing Sector Econometric Forecast Accuracy

Holcomb

2020

IJHMA

Purpose This paper aims to analyze the median price for existing single-family housing units in Las Cruces, New Mexico. The proposed theoretical model accounts for the interplay between supply and demand sides of a metropolitan housing market. Design/methodology/approach This study analyzes the median price for existing single-family housing units in Las Cruces, New Mexico. The proposed theoretical model accounts for the interplay between supply and demand sides of a metropolitan housing market. Explanatory variables used in the analysis are real per capita income, the housing stock, real mortgage rates, real apartment rents and the median real price of single-family units in the USA. Annual frequency data are collected for a 1971–2017 sample period. Parameter estimation is completed using two-stage generalized least squares. Empirical results confirm several, but not all, of the hypotheses associated with the underlying analytical model. In particular, Las Cruces housing prices are found to be reliably correlated with local income and national housing prices. Findings Empirical results confirm several of the hypotheses associated with the underlying analytical model. In particular, Las Cruces housing prices are found to be reliably correlated with local income and national housing prices. Research limitations/implications Results obtained support only a subset of the hypothetical relationships associated with the theoretical model. Additional testing for other small and/or medium sized is required to clarify whether these outcomes are unique to Las Cruces. Practical implications Local income fluctuations and national housing price fluctuations appear to be reliably related to housing price fluctuations for this metropolitan economy. Originality/value Comparatively little housing market research has been conducted for small and medium size urban economies. There is no guarantee that results obtained for large metropolitan housing markets are representative of smaller regional housing markets. The model developed has fairly moderate data requirements and may be applicable to other small and medium size economies such as Las Cruces.

Section: Prior Studiesmentioning

confidence: 99%

Section: Prior Studiesmentioning

confidence: 99%

See 1 more Smart Citation

Las Cruces housing price fluctuations

Holcomb

2020

IJHMA

“…Similar to other categories of econometric forecasts developed for the borderplex regional economies of Las Cruces, El Paso, Ciudad Juárez, and Chihuahua City, the Table 2 SEM comparative forecast performance is mixed [ Fullerton , 2004; Fullerton and Kelley , 2006, 2008]. There are seven water variables where the SEM econometric projections display more accuracy than both of the two benchmark forecasts: El Paso single‐family meters, El Paso total business meters, El Paso other meters, El Paso commercial gallons consumed, Chihuahua City water meters, and Chihuahua City total water consumption.…”

Section: Resultsmentioning

confidence: 79%

“…The RWD forecasts are generated using the last observed historical percentage change for a particular variable. Both categories of the random walk forecasts have historically provided competitive benchmarks against regional econometric forecasts in other contexts such as transportation and housing [ Fullerton , 2004; Fullerton and Kelley , 2008].…”

Section: Methodsmentioning

confidence: 99%

Municipal water consumption forecast accuracy

Water Resources Research

Molina

2010

Self Cite

[1] Municipal water consumption planning is an active area of research because of infrastructure construction and maintenance costs, supply constraints, and water quality assurance. In spite of that, relatively few water forecast accuracy assessments have been completed to date, although some internal documentation may exist as part of the proprietary "grey literature." This study utilizes a data set of previously published municipal consumption forecasts to partially fill that gap in the empirical water economics literature. Previously published municipal water econometric forecasts for three public utilities are examined for predictive accuracy against two random walk benchmarks commonly used in regional analyses. Descriptive metrics used to quantify forecast accuracy include root-mean-square error and Theil inequality statistics. Formal statistical assessments are completed using four-pronged error differential regression F tests. Similar to studies for other metropolitan econometric forecasts in areas with similar demographic and labor market characteristics, model predictive performances for the municipal water aggregates in this effort are mixed for each of the municipalities included in the sample. Given the competitiveness of the benchmarks, analysts should employ care when utilizing econometric forecasts of municipal water consumption for planning purposes, comparing them to recent historical observations and trends to insure reliability. Comparative results using data from other markets, including regions facing differing labor and demographic conditions, would also be helpful.

Additional Evidence Regarding Las Cruces Housing Price Dynamics

2022

5009

To examine housing price dynamics for Las Cruces, New Mexico, a theoretical model is developed that takes into account the supply and demand sides. The employed ARDL estimation methodology allows for more realistic modeling of market dynamics than prior studies of this residential real estate market, the second largest in New Mexico. A slightly larger sample size is also utilized. The results obtained corroborate evidence reported in several previous housing studies. Some unexpected outcomes also indicate that consistently reliable interlinkages between housing prices and explanatory variables may be elusive. Among the latter, an inverse relationship between apartment rents and single-family housing prices is most surprising but may be a consequence of the large university and college student population in Las Cruces. As post-secondary enrollments increase, so too do faculty numbers, allowing both housing prices and apartment rents to increase simultaneously. That implies that apartments and single-unit houses may be complements rather than substitutes in college towns like Las Cruces. Additional research using data for other small- and medium-sized urban economies would be helpful.