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Retrospective Analysis of the Dwelling Price by means of STAR models with neighbourhood effects. An application to the construction of price indexes

Author

Listed:
  • Asuncion Beamonte

    () (Universidad de Zaragoza)

  • Pilar Gargallo

    () (Universidad de Zaragoza)

  • Manuel Salvador

    () (Universidad de Zaragoza)

Abstract

The need of retrospective predictions arises in situations such as litigations, inheritances or fiscal purposes to provide the fair market value of a dwelling of given characteristics and specific location. In this paper, a Bayesian method to carry out this retrospective analysis is proposed by using a Spatio-Temporal Autoregressive (STAR) model with neighborhood effects and heteroscedastic errors. Moreover, the developed methodology allows the construction of a retrospective price index that shows the evolution of the dwelling price level in a specific geographical area. The methodology is illustrated with an application to the real estate market in the Spanish city of Zaragoza.

Suggested Citation

  • Asuncion Beamonte & Pilar Gargallo & Manuel Salvador, 2013. "Retrospective Analysis of the Dwelling Price by means of STAR models with neighbourhood effects. An application to the construction of price indexes," Journal of Real Estate Research, American Real Estate Society, vol. 35(2), pages 173-198.
  • Handle: RePEc:jre:issued:v:35:n:2:2013:p:173-198
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    JEL classification:

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

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