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Textual Analysis in Real Estate

Author

Listed:
  • Adam Nowak

    (West Virginia University, Department of Economics)

  • Patrick Smith

    (Georgia State University, J. Mack Robinson College of Business)

Abstract

This paper incorporates text data from MLS listings from Atlanta, GA into a hedonic pricing model. Text is found to decrease pricing error by more than 25%. Information from text is incorporated into a linear model using a tokenization approach. By doing so, the implicit prices for various words and phrases are estimated. The estimation focuses on simultaneous variable selection and estimation for linear models in the presence of a large number of variables. The LASSO procedure and variants are shown to outperform least-squares in out-of-sample testing.

Suggested Citation

  • Adam Nowak & Patrick Smith, 2015. "Textual Analysis in Real Estate," Working Papers 15-34, Department of Economics, West Virginia University.
    • Handle: RePEc:wvu:wpaper:15-34
    as

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    File URL: http://busecon.wvu.edu/phd_economics/pdf/15-34.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    textual analysis; big data; real estate valuation;
    All these keywords.

    JEL classification:

    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
    • C18 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Methodolical Issues: General
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • C55 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Large Data Sets: Modeling and Analysis
    • C65 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Miscellaneous Mathematical Tools
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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