IDEAS home Printed from https://ideas.repec.org/a/eme/ijhmap/v6y2013i1p63-78.html
   My bibliography  Save this article

The importance of unobserved attributes in hedonic house price models

Author

Listed:
  • Liv Osland

Abstract

Purpose - Hedonic models are commonly used in housing markets studies to obtain quantitative measures of various implicit prices. The use of panel data in other fields of research has proved to be valuable when accounting for unobserved heterogeneity. Given that houses are extremely heterogeneous, and given that it is impossible to include all relevant attributes in hedonic models, removing unobserved heterogeneity by basic panel data models sounds appealing. This paper seeks to compare results between models that use pooled cross section data and panel data. The main research question is whether the pooled model gives unbiased estimates on some basic implicit prices. Design/methodology/approach - The paper applies the hedonic methodology. It uses regression analysis and estimate basic and parsimonious models that use either pooled time series and cross section data or panel data. The empirical results when using the two different approaches are compared. Findings - The paper illustrates that the results from the pooled timeseries and cross section model could be biased for some basic implicit prices. With some nuances, it is illustrated that in specific situations the use of a basic panel data estimator could be a simple solution to the problem of misspecification due to omitted, time‐invariant explanatory variables. Research limitations/implications - Most of the included variables do not change over time, however. In these cases potential bias using a basic fixed effects approach could not be checked for. It is also problematic that the variation in some of the time‐varying variables is not reliable and small. Finally, there could be a problem with sample selection bias. This may limit the usefulness of using panel data in disaggregated hedonic house price studies. Originality/value - Hedonic house price models are frequently used in housing market research. It is therefore important to study in various ways whether the traditional approaches provide unbiased results. In this paper models that use panel data are compared to models that use more traditional time series and cross section data. To the author's knowledge, this approach has not been followed before.

Suggested Citation

  • Liv Osland, 2013. "The importance of unobserved attributes in hedonic house price models," International Journal of Housing Markets and Analysis, Emerald Group Publishing Limited, vol. 6(1), pages 63-78, March.
  • Handle: RePEc:eme:ijhmap:v:6:y:2013:i:1:p:63-78
    DOI: 10.1108/17538271311306020
    as

    Download full text from publisher

    File URL: https://www.emerald.com/insight/content/doi/10.1108/17538271311306020/full/html?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers

    File URL: https://www.emerald.com/insight/content/doi/10.1108/17538271311306020/full/pdf?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers

    File URL: https://libkey.io/10.1108/17538271311306020?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Qiu, Feng & Tong, Qingmeng, 2021. "A spatial difference-in-differences approach to evaluate the impact of light rail transit on property values," Economic Modelling, Elsevier, vol. 99(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eme:ijhmap:v:6:y:2013:i:1:p:63-78. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Emerald Support (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.