IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this article

Using Quantile Regression in Hedonic Analysis to Reveal Submarket Competition

Listed author(s):
  • Michael C. Farmer


    (Texas Tech University)

  • Clifford A. Lipscomb


    (Valdosta State University)

Registered author(s):

    A root concern of hedonic property value models is that some commonly-used estimators aggregate very diverse households into a single regression, which may explain the marked differences in implicit price estimates for the same housing attributes across studies. In this paper, we extend a model that captures household heterogeneity through submarket identification and use quantile regression analysis to explore the role submarket competition plays in setting housing prices in those price ranges where different submarkets occupy homes of similar price. We find evidence of direct competition between submarkets with different preferences for at least some homes in a single neighborhood market. We cluster packages of attributes into three broad indices: dwelling structure variables, location variables, and adjacency variables. In the price ranges of competition between two submarkets, there is a clear premium paid in one of the indexed attribute by the final occupant to ‘outbid’ a member from another submarket. The attributes that realize a premium are those that are expected from prior analysis on what those submarkets prefer; and these premiums introduce variation in housing prices that would not be captured by standard hedonic approaches. By examining hedonic parameter instability at different housing price levels, we uncover not only latent diversity among homeowners but direct competition between them that calls into question policy and market conclusions drawn from standard hedonic price models, especially large sample hedonic studies.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL:
    File Function: Full text
    Download Restriction: no

    Article provided by American Real Estate Society in its journal journal of Real Estate Research.

    Volume (Year): 32 (2010)
    Issue (Month): 4 ()
    Pages: 435-460

    in new window

    Handle: RePEc:jre:issued:v:32:n:4:2010:p:435-460
    Contact details of provider: Postal:
    American Real Estate Society Clemson University School of Business & Behavioral Science Department of Finance 401 Sirrine Hall Clemson, SC 29634-1323

    Web page:

    Order Information: Postal: Diane Quarles American Real Estate Society Manager of Member Services Clemson University Box 341323 Clemson, SC 29634-1323
    Web: Email:

    No references listed on IDEAS
    You can help add them by filling out this form.

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:jre:issued:v:32:n:4:2010:p:435-460. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (JRER Graduate Assistant/Webmaster)

    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.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 profile, as there may be some citations waiting for confirmation.

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

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.