Recent work has shown how spatial econometrics can be applied to a housing-value hedonic equation that includes air pollution variables. This paper develops a Spatial Durbin Model that incorporates an Air Pollution Index, instead of one or two pollution variables, and considers spatial and non-spatial endogeneity jointly. Exogenous and endogenous possibilities are considered for the index. The empirical analysis focuses on a European city, Madrid. A massive database was constructed for the analysis in 2009 that includes almost 12,000 dwellings.