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Hedonic pricing models and residual house price volatility

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  • Gaetano Lisi

    (University of Cassino and Southern Lazio)

Abstract

This paper develops a simple method for measuring the residual house price volatility, namely, the house price variation which cannot be attributed to the heterogeneous nature of real estate goods. By creating a quality index of housing characteristics, the method is able to detect “anomalous” situations, in which the sale price does not reflect (in whole or in part) the attributes or qualities that are possessed by the property. In standard market situations, indeed, a higher (lower) price should identify a better (worse) set of housing characteristics. Therefore, we use the hedonic approach by considering that distinction. Furthermore, we estimate a hedonic model where the quality index of housing characteristics is used instead of the housing characteristics. Eventually, this method refines the estimates of marginal prices of housing characteristics and also provides an estimate of the residual house price volatility.

Suggested Citation

  • Gaetano Lisi, 2019. "Hedonic pricing models and residual house price volatility," Letters in Spatial and Resource Sciences, Springer, vol. 12(2), pages 133-142, August.
    • Handle: RePEc:spr:lsprsc:v:12:y:2019:i:2:d:10.1007_s12076-019-00232-2
    DOI: 10.1007/s12076-019-00232-2
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    References listed on IDEAS

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    Cited by:

    1. Zhengyuan Chai & Yi Yang & Yangyang Zhao & Yonghu Fu & Ling Hao, 2021. "Exploring the Effects of Contextual Factors on Residential Land Prices Using an Extended Geographically and Temporally Weighted Regression Model," Land, MDPI, vol. 10(11), pages 1-20, October.

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    More about this item

    Keywords

    Housing prices; Residual price volatility; Hedonic models; Marginal prices;
    All these keywords.

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R32 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other Spatial Production and Pricing Analysis

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