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Robust hedonic price indexes

Author

Listed:
  • Steven C Bourassa
  • Eva Cantoni
  • Martin Hoesli

Abstract

Purpose - – The purpose of this paper is to demonstrate the application of robust techniques to the estimation of hedonic house price indexes. Design/methodology/approach - – The authors use simulation analysis to compare an index estimated using ordinary least squares (OLS) with several indexes estimated using robust techniques. The analysis uses sales transactions data from a US city. The authors then explore how robust methods can correct for omitted variables under some circumstances and how they affect the revision problem that occurs when longitudinal hedonic indexes are updated. Findings - – Robust methods can resolve missing variable problems in some circumstances and also can substantially reduce the revision problem in longitudinal hedonic indexes. Practical implications - – Robust techniques may be preferable to OLS when constructing longitudinal hedonic indexes. Originality/value - – This is the first paper to undertake a systematic analysis of the applicability of robust techniques in constructing hedonic house price indexes.

Suggested Citation

  • Steven C Bourassa & Eva Cantoni & Martin Hoesli, 2016. "Robust hedonic price indexes," International Journal of Housing Markets and Analysis, Emerald Group Publishing Limited, vol. 9(1), pages 47-65, March.
    • Handle: RePEc:eme:ijhmap:v:9:y:2016:i:1:p:47-65
    DOI: 10.1108/IJHMA-11-2014-0050
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    Citations

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    Cited by:

    1. Elżbieta Jasińska & Edward Preweda, 2021. "Statistical Modelling of the Market Value of Dwellings, on the Example of the City of Kraków," Sustainability, MDPI, vol. 13(16), pages 1-25, August.
    2. Hill, Robert J. & Trojanek, Radoslaw, 2022. "An evaluation of competing methods for constructing house price indexes: The case of Warsaw," Land Use Policy, Elsevier, vol. 120(C).
    3. Bourassa, Steven C. & Hoesli, Martin, 2022. "Hedonic, residual, and matching methods for residential land valuation," Journal of Housing Economics, Elsevier, vol. 58(PA).

    More about this item

    Keywords

    Housing market analysis; Data problems; Distressed sales; Hedonic models; House price indexes; Robust methods;
    All these keywords.

    JEL classification:

    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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