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Using a Finite Mixture Model of Heterogeneous Households to Delineate Housing Submarkets

Author

Listed:
  • Eric Belasco

    (Montana State University)

  • Michael C. Farmer

    (Texas Tech University)

  • Clifford A. Lipscomb

    (Greenfield Advisors LLC)

Abstract

We use a finite mixture model to identify latent submarkets from household demographics that estimates a separate hedonic regression equation for each submarket. The method is a relatively robust empirical tool to extract submarkets from demographic information with far less effort than suspected. This method draws from latent class models to group observations in a straightforward, data-driven manner. Additionally, the unique information about each submarket is easily derived and summarized. Results are also shown to more convincingly sort submarkets than a prior study in the same area that used more comprehensive data.

Suggested Citation

  • Eric Belasco & Michael C. Farmer & Clifford A. Lipscomb, 2012. "Using a Finite Mixture Model of Heterogeneous Households to Delineate Housing Submarkets," Journal of Real Estate Research, American Real Estate Society, vol. 34(4), pages 577-594.
    • Handle: RePEc:jre:issued:v:34:n:4:2012:p:577-594
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    Citations

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    Cited by:

    1. Renigier-Biłozor, Małgorzata & Janowski, Artur & Walacik, Marek & Chmielewska, Aneta, 2022. "Modern challenges of property market analysis- homogeneous areas determination," Land Use Policy, Elsevier, vol. 119(C).
    2. Nishi, Hayato & Asami, Yasushi & Shimizu, Chihiro, 2021. "The illusion of a hedonic price function: Nonparametric interpretable segmentation for hedonic inference," Journal of Housing Economics, Elsevier, vol. 52(C).
    3. Rinas Kashbrasiev, 2011. "A Multi-Criteria Analysis of Russian International and Interregional Logistics Centers," ERSA conference papers ersa11p66, European Regional Science Association.
    4. Tang, M. & Thompson, N.M. & Boyer, C.N. & Widmar, N.J.O. & Lusk, J.L., 2023. "Implicit Market Segmentation and Valuation of Angus Bull Attributes," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 48(2), May.

    More about this item

    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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