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Appraisal Using Generalized Additive Models

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Abstract

Many of the results from real estate empirical studies depend upon using a correct functional form for their validity. Unfortunately, common parametric statistical tools cannot easily control for the possibility of misspecification. Recently, semiparametric estimators such as generalized additive models (GAMs) have arisen which can automatically control for additive (in price) or multiplicative (in ln(price)) nonlinear relations among the independent and dependent variables. As the paper shows, GAMs can empirically outperform naive parametric and polynomial models in ex-sample predictive behavior. Moreover, GAMs have well-developed statistical properties and can suggest useful transformations in parametric settings.

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File URL: http://aux.zicklin.baruch.cuny.edu/jrer/papers/pdf/past/vol15n01/v15p077.pdf
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Bibliographic Info

Article provided by American Real Estate Society in its journal Journal of Real Estate Research.

Volume (Year): 15 (1998)
Issue (Month): 1 ()
Pages: 77-100

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Handle: RePEc:jre:issued:v:15:n:1:1998:p:77-100

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Postal: American Real Estate Society Clemson University School of Business & Behavioral Science Department of Finance 401 Sirrine Hall Clemson, SC 29634-1323
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Postal: Diane Quarles American Real Estate Society Manager of Member Services Clemson University Box 341323 Clemson, SC 29634-1323
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Web: http://aux.zicklin.baruch.cuny.edu/jrer/about/get.htm

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  1. Powell, James L & Stock, James H & Stoker, Thomas M, 1989. "Semiparametric Estimation of Index Coefficients," Econometrica, Econometric Society, vol. 57(6), pages 1403-30, November.
  2. Coulson, N. Edward, 1989. "The empirical content of the linearity-as-repackaging hypothesis," Journal of Urban Economics, Elsevier, vol. 25(3), pages 295-309, May.
  3. Richard Meese & Nancy Wallace, 1991. "Nonparametric Estimation of Dynamic Hedonic Price Models and the Construction of Residential Housing Price Indices," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 19(3), pages 308-332.
  4. Hans R. Isakson, 1986. "The Nearest Neighbors Appraisal Technique: An Alternative to the Adjustment Grid Methods," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 14(2), pages 274-286.
  5. Anglin, Paul M & Gencay, Ramazan, 1996. "Semiparametric Estimation of a Hedonic Price Function," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 11(6), pages 633-48, Nov.-Dec..
  6. Colwell, Peter F, 1991. "Functional Obsolescence and an Extension of Hedonic Theory," The Journal of Real Estate Finance and Economics, Springer, vol. 4(1), pages 49-58, March.
  7. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
  8. Mark A. Sunderman & John W. Birch & Roger E. Cannaday & Thomas W. Hamilton, 1990. "Testing for Vertical Inequity in Property Tax Systems," Journal of Real Estate Research, American Real Estate Society, vol. 5(3), pages 319-334.
  9. A. Quang Do & G. Grudnitski, 1993. "A Neural Network Analysis of the Effect of Age on Housing Values," Journal of Real Estate Research, American Real Estate Society, vol. 8(2), pages 253-264.
  10. Haerdle,Wolfgang & Stoker,Thomas, 1987. "Investigations smooth multiple regression by the method of average derivatives," Discussion Paper Serie A 107, University of Bonn, Germany.
  11. Pace, R Kelley, 1993. "Nonparametric Methods with Applications to Hedonic Models," The Journal of Real Estate Finance and Economics, Springer, vol. 7(3), pages 185-204, November.
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Cited by:
  1. Brasington, David M. & Hite, Diane, 2005. "Demand for environmental quality: a spatial hedonic analysis," Regional Science and Urban Economics, Elsevier, vol. 35(1), pages 57-82, January.
  2. Lall, Somik V. & Lundberg, Mattias, 2006. "What are public services worth, and to whom ? Non-parametric estimation of capitalization in Pune," Policy Research Working Paper Series 3924, The World Bank.
  3. Bontemps, Christophe & Simioni, Michel & Surry, Yves R., 2005. "Hedonic Housing Prices and Agricultural Pollution: An Empirical Investigation on Semiparametric Models," 2005 Annual meeting, July 24-27, Providence, RI 19547, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  4. David M. Brasington & Diane Hite, . "Demand for Environmental Quality: A Spatial Hedonic Approach," Departmental Working Papers 2005-08, Department of Economics, Louisiana State University.
  5. Wolfgang Brunauer & Stefan Lang & Peter Wechselberger & Sven Bienert, 2008. "Additive Hedonic Regression Models with Spatial Scaling Factors: An Application for Rents in Vienna," Working Papers 2008-17, Faculty of Economics and Statistics, University of Innsbruck.
  6. James A. Bryant & Donald R. Epley, 1998. "Cancerphobia: Electromagnetic Fields and Their Impact on Residential Loan Values," Journal of Real Estate Research, American Real Estate Society, vol. 15(1), pages 115-129.
  7. Bin, Okmyung, 2004. "A prediction comparison of housing sales prices by parametric versus semi-parametric regressions," Journal of Housing Economics, Elsevier, vol. 13(1), pages 68-84, March.
  8. van Wezel, M.C. & Kagie, M. & Potharst, R., 2005. "Boosting the accuracy of hedonic pricing models," Econometric Institute Research Papers EI 2005-50, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
  9. W. Brunauer & S. Lang & P. Wechselberger & S. Bienert, 2010. "Additive Hedonic Regression Models with Spatial Scaling Factors: An Application for Rents in Vienna," The Journal of Real Estate Finance and Economics, Springer, vol. 41(4), pages 390-411, November.
  10. R. Kelley Pace, 1998. "Total Grid Estimation," Journal of Real Estate Research, American Real Estate Society, vol. 15(1), pages 101-114.
  11. repec:asg:wpaper:1006 is not listed on IDEAS
  12. Kagie, M. & van Wezel, M.C., 2006. "Hedonic price models and indices based on boosting applied to the Dutch housing market," Econometric Institute Research Papers EI 2006-17, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
  13. Brasington, David M., 2001. "Capitalization and Community Size," Journal of Urban Economics, Elsevier, vol. 50(3), pages 385-395, November.

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