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Modeling House Pricing in the Real Estate Market of São Paulo City

Author

Listed:
  • Denisard Cneio de Oliveira Alves

    (University of São Paulo, FEA Department of Economics)

  • Joe Akira Yoshino

    (University of São Paulo, FEA Department of Economics)

  • Paula Carvalho Pereda
  • Carla Jucá Amrein

Abstract

Hedonic modeling has become a benchmark for pricing real assets with several intrinsic characteristics. This work tests also others dimensions for asset pricing: the quality of life in the housing neighborhood and macroeconomic variables. The data is about the real estate market in São Paulo city from January 2001 to March 2008. The main results were: the longer the maturity of mortgage financing, the larger the housing price, but decreasing interest rate spread stimulate the real estate market, and the interactions between the dummy for the boom period and either housing characteristics or bank interest rates spread show that the hedonic model loses its relative importance for pricing, while market risk variables become much more relevant. Thus, these new findings suggests that for modeling a house price index it is not sufficient to consider only average prices or a hedonic approach, but both the market and credit risks as well.

Suggested Citation

  • Denisard Cneio de Oliveira Alves & Joe Akira Yoshino & Paula Carvalho Pereda & Carla Jucá Amrein, 2011. "Modeling House Pricing in the Real Estate Market of São Paulo City," Brazilian Review of Finance, Brazilian Society of Finance, vol. 9(2), pages 167-187.
    • Handle: RePEc:brf:journl:v:9:y:2011:i:2:p:167-187
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    More about this item

    Keywords

    Pricing Real Estate in São Paulo - Brazil; Hedonic Model Applied for Asset Pricing; Pricing Rights to Built-Home;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R33 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Nonagricultural and Nonresidential Real Estate Markets

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