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A Neural Network Analysis of the Effect of Age on Housing Values

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    Abstract

    Empirical studies using multiple regression find the value of a residential property declines with its age. Because these results confirm the fact of physical deterioration of a house over time, little attention is paid to the statistical technique's inherent shortcomings. Accordingly, this paper uses a neural network, which is able to overcome multiple regression's methodological problems, to re-examine the effect of age on a house's value. We find that a negative relationship of value to age holds only for the first sixteen to twenty years of the life of a house. Then, not only does the decline in value stop, but a house actually starts to experience appreciation related, in part, to its lot size.

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    File URL: http://aux.zicklin.baruch.cuny.edu/jrer/papers/pdf/past/vol08n02/v08p253.pdf
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    Bibliographic Info

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

    Volume (Year): 8 (1993)
    Issue (Month): 2 ()
    Pages: 253-264

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    Handle: RePEc:jre:issued:v:8:n:2:1993:p:253-264

    Contact details of provider:
    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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    Web page: http://www.aresnet.org/

    Order Information:
    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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    Cited by:
    1. Manuel Landajo & Celia Bilbao & Amelia Bilbao, 2012. "Nonparametric neural network modeling of hedonic prices in the housing market," Empirical Economics, Springer, vol. 42(3), pages 987-1009, June.
    2. Plakandaras, Vasilios & Gupta, Rangan & Papadimitriou, Theophilos & Gogas, Periklis, 2014. "Forecasting the U.S. Real House Price Index," DUTH Research Papers in Economics 10-2014, Democritus University of Thrace, Department of Economics.
    3. R. Kelley Pace, 1998. "Appraisal Using Generalized Additive Models," Journal of Real Estate Research, American Real Estate Society, vol. 15(1), pages 77-100.
    4. Steven Peterson & Albert B. Flanagan, 2009. "Neural Network Hedonic Pricing Models in Mass Real Estate Appraisal," Journal of Real Estate Research, American Real Estate Society, vol. 31(2), pages 147-164.
    5. Nghiep Nguyen & Al Cripps, 2001. "Predicting Housing Value: A Comparison of Multiple Regression Analysis and Artificial Neural Networks," Journal of Real Estate Research, American Real Estate Society, vol. 22(3), pages 313-336.

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