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Which factors capitalize into house prices? A Bayesian averaging approach

  • Stadelmann, David

This paper investigates the robustness of 33 community-specific explanatory variables for house prices in the Swiss metropolitan area of Zurich using Bayesian model averaging. The analysis suggests a new way to perform hedonic variable selection and provides a minimal list of variables which may serve as a priori constraints when predicting house prices or estimating the effect of other community-specific characteristics in a metropolitan area in a highly developed country. In the context analyzed, the main variables which capitalize with a high posterior probability are location-specific real estate characteristics, municipal taxes and expenditure for culture, health and social well-being. Demographic as well as other socio-economic controls seem to be of minor importance.

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Article provided by Elsevier in its journal Journal of Housing Economics.

Volume (Year): 19 (2010)
Issue (Month): 3 (September)
Pages: 180-204

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Handle: RePEc:eee:jhouse:v:19:y:2010:i:3:p:180-204
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622881

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