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Using a Finite Mixture Model of Heterogeneous Households to Delineate Housing Submarkets


  • Eric Belasco

    () (Montana State University)

  • Michael C. Farmer

    () (Texas Tech University)

  • Clifford A. Lipscomb

    () (Greenfield Advisors LLC)


We use a finite mixture model to identify latent submarkets from household demographics that estimates a separate hedonic regression equation for each submarket. The method is a relatively robust empirical tool to extract submarkets from demographic information with far less effort than suspected. This method draws from latent class models to group observations in a straightforward, data-driven manner. Additionally, the unique information about each submarket is easily derived and summarized. Results are also shown to more convincingly sort submarkets than a prior study in the same area that used more comprehensive data.

Suggested Citation

  • Eric Belasco & Michael C. Farmer & Clifford A. Lipscomb, 2012. "Using a Finite Mixture Model of Heterogeneous Households to Delineate Housing Submarkets," Journal of Real Estate Research, American Real Estate Society, vol. 34(4), pages 577-594.
  • Handle: RePEc:jre:issued:v:34:n:4:2012:p:577-594

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    References listed on IDEAS

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    Cited by:

    1. Rinas Kashbrasiev, 2011. "A Multi-Criteria Analysis of Russian International and Interregional Logistics Centers," ERSA conference papers ersa11p66, European Regional Science Association.

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    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services


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