An Analysis of the Relationship between Price and Variance for Homogeneous Housing Stock
This study examines the structure of price variance for homogeneous residential housing stock, where homogeneous is defined as economically equivalent, not necessarily physically identical. Assessed values, obtained from ad valorem tax rolls, are used as the basis for identifying properties considered to be economically equivalent. From these data an investigation of the distribution of sale price and variance for housing in selected value ranges is conducted. Subsequently, ANOVA is performed to determine the composition of variance through time and across cities within one metropolitan housing market. In line with conventional wisdom, we find that variance increases with price over the entire data set. The increase, however, is not constant nor does it exhibit a simple proportional relationship to price. Variance increases at an increasing rate in the lower to mid-price ranges and continues to increase but at a decreasing rate in the upper price ranges. From this it was determined that the functional relationship between price and variance is best approximated by a quadratic function in the lower to mid-price ranges and a cubic function when higher price properties are included. ANOVA results indicate that variance is significantly different through time and across location. The interactive term was also significant. The findings of this study would appear to have implications for fee appraisers, assessors, investors, and mortgage lenders.
Volume (Year): 6 (1991)
Issue (Month): 1 ()
|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: http://www.aresnet.org/
|Order Information:|| Postal: Diane Quarles American Real Estate Society Manager of Member Services Clemson University Box 341323 Clemson, SC 29634-1323|
Web: http://pages.jh.edu/jrer/about/get.htm Email:
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Mark G. Dotzour, 1988. "Quantifying Estimation Bias in Residential Appraisal," Journal of Real Estate Research, American Real Estate Society, vol. 3(3), pages 1-11.
- William A. Donnelly, 1989. "The Methodology of Housing Value Assessment: An Analysis," Journal of Real Estate Research, American Real Estate Society, vol. 4(2), pages 1-12.
When requesting a correction, please mention this item's handle: RePEc:jre:issued:v:6:n:1:1991:p:99-112. 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.