A hedonic approach to the valuation of the effect of criminal violence on housing prices in Acapulco City

In the last decade, Acapulco City, Mexico, has faced serious problems related to increasing criminal violence, despite the city’s outstanding tourism and economic importance. We propose a hedonic regression model to quantitatively determine the effect of criminal violence on housing prices in the 2015–2016 period in Acapulco City. In addition to structural variables of the housing, our model includes hedonic variables such as the number of murders that occurred in the neighborhood of the housing, school closures due to shooting episodes nearby, and a compound index of tourism. Our results show that the increasing levels of criminal violence in neighborhoods in Acapulco City are a significant factor in the determination of housing market prices.