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Housing Renovations and the Quantile Repeat-Sales Price Index

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  • Daniel P. McMillen
  • Paul Thorsnes

Abstract

A median-based quantile estimator suffers less bias from positive outliers, such as unobserved renovations, than a standard mean-based estimator. Quantile repeat-sales estimates for single-family homes in the city of Chicago show nominal price appreciation of 68.9% between 1993 and 2002, substantially smaller than the standard approach's estimate of 77.8%. Omitting observations with building permits reduces the mean and median-based estimates by 4.4 and 1.6 percentage points. The results imply that quality improvements account for much of the rapid rise in house prices, and that a median-based quantile estimator produces a more accurate view of the price performance of a typical house. Copyright 2006 American Real Estate and Urban Economics Association

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Bibliographic Info

Article provided by American Real Estate and Urban Economics Association in its journal Real Estate Economics.

Volume (Year): 34 (2006)
Issue (Month): 4 (December)
Pages: 567-584

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Handle: RePEc:bla:reesec:v:34:y:2006:i:4:p:567-584

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Cited by:
  1. Nicodemo, Catia & Raya, Josep Maria, 2012. "Change in the distribution of house prices across Spanish cities," Regional Science and Urban Economics, Elsevier, vol. 42(4), pages 739-748.
  2. Paul Carrillo & Anthony Yezer, 2008. "Alternative Measures of Homeownership Gaps Across Segregated Neighboorhoods," Working Papers 2008-07, The George Washington University, Institute for International Economic Policy.
  3. Hazer Inaltekin & Robert Jarrow & Mehmet Saglam & Yildiray Yildirim, 2009. "Housing Market Microstructure," Papers 0907.1853, arXiv.org.
  4. Diewert, W. Erwin & Nishimura , Kiyohiko & Shimizu, Chihiro & Watanabe, Tsutomu, 2014. "Residential Property Price Indexes for Japan: An Outline of the Japanese Official RPPI," Economics working papers erwin_diewert-2014-17, Vancouver School of Economics, revised 27 Mar 2014.
  5. James Bugden, 2014. "Quality-Adjusted Repeat-Sale House Price Indices," Working Papers 2014.01, School of Economics, La Trobe University.
  6. James Bugden, 2013. "Renovations and the Repeat-Sales House Price Index," Working Papers 2013.08, School of Economics, La Trobe University.
  7. İnaltekin, Hazer & Jarrow, Robert A. & Sağlam, Mehmet & Yıldırım, Yıldıray, 2011. "Housing prices and the optimal time-on-the-market decision," Finance Research Letters, Elsevier, vol. 8(4), pages 171-179.

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