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Which factors capitalize into house prices? A Bayesian averaging approach

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  • Stadelmann, David

Abstract

This paper investigates the robustness of 33 community-specific explanatory variables for house prices in the Swiss metropolitan area of Zurich using Bayesian model averaging. The analysis suggests a new way to perform hedonic variable selection and provides a minimal list of variables which may serve as a priori constraints when predicting house prices or estimating the effect of other community-specific characteristics in a metropolitan area in a highly developed country. In the context analyzed, the main variables which capitalize with a high posterior probability are location-specific real estate characteristics, municipal taxes and expenditure for culture, health and social well-being. Demographic as well as other socio-economic controls seem to be of minor importance.

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  • Stadelmann, David, 2010. "Which factors capitalize into house prices? A Bayesian averaging approach," Journal of Housing Economics, Elsevier, vol. 19(3), pages 180-204, September.
    • Handle: RePEc:eee:jhouse:v:19:y:2010:i:3:p:180-204
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    Cited by:

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    2. Karolien De Bruyne & Jan Van Hove, 2013. "Explaining the spatial variation in housing prices: an economic geography approach," Applied Economics, Taylor & Francis Journals, vol. 45(13), pages 1673-1689, May.
    3. David Stadelmann & Steve Billon, 2012. "Capitalisation of Fiscal Variables and Land Scarcity," Urban Studies, Urban Studies Journal Limited, vol. 49(7), pages 1571-1594, May.
    4. Liao, Wen-Chi & Wang, Xizhu, 2012. "Hedonic house prices and spatial quantile regression," Journal of Housing Economics, Elsevier, vol. 21(1), pages 16-27.
    5. Nuri Hacıevliyagil & Krzysztof Drachal & Ibrahim Halil Eksi, 2022. "Predicting House Prices Using DMA Method: Evidence from Turkey," Economies, MDPI, vol. 10(3), pages 1-27, March.
    6. Charles Ka Yui Leung & Edward Chi Ho Tang, 2023. "The dynamics of the house price‐to‐income ratio: Theory and evidence," Contemporary Economic Policy, Western Economic Association International, vol. 41(1), pages 61-78, January.
    7. Ouyang, Yanyan & Cai, Hongbo & Yu, Xuefei & Li, Zijian, 2022. "Capitalization of social infrastructure into China's urban and rural housing values: Empirical evidence from Bayesian Model Averaging," Economic Modelling, Elsevier, vol. 107(C).
    8. Schaltegger, Christoph A. & Somogyi, Frank & Sturm, Jan-Egbert, 2011. "Tax competition and income sorting: Evidence from the Zurich metropolitan area," European Journal of Political Economy, Elsevier, vol. 27(3), pages 455-470, September.
    9. Tuğçe Acar, 2021. "Determining Housing Prices Using The Semiparametric Estimation Within The Hedonic Price Model Framework: Case Study of Istanbul Housing Market Example," Journal of Research in Economics, Politics & Finance, Ersan ERSOY, vol. 5(3), pages 561-575.
    10. Benjamin Wirth & Davidt Hardt & Isabella Lehmann, 2016. "Capitalization of Local Taxes and Expenditures - The case of Bavarian Municipalities," ERSA conference papers ersa16p773, European Regional Science Association.
    11. Mario Morger, 2017. "Heterogeneity in Income Tax Capitalization: Evidence from the Swiss Housing Market," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 153(3), pages 227-259, July.
    12. Tuğçe Acar, 2020. "Determining Housing Prices Using The Semiparametric Estimation Within The Hedonic Price Model Framework: Case Study of Istanbul Housing Market Example," Journal of Research in Economics, Politics & Finance, Ersan ERSOY, vol. 5(3), pages 561-575.
    13. Tommy Wu & Michael Cheng & Ken Wong, 2017. "Bayesian analysis of Hong Kong's housing price dynamics," Pacific Economic Review, Wiley Blackwell, vol. 22(3), pages 312-331, August.
    14. Piotr Białowolski & Tomasz Kuszewski & Bartosz Witkowski, 2012. "Macroeconomic Forecasts in Models with Bayesian Averaging of Classical Estimates," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 6(1), March.

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    More about this item

    Keywords

    Capitalization House price hedonic Model uncertainity Bayesian model averaging;

    JEL classification:

    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • H40 - Public Economics - - Publicly Provided Goods - - - General

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