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Spatial Autocorrelations and Urban Housing Market Segmentation

  • Yong Tu

    ()

  • Hua Sun
  • Shi-Ming Yu
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This paper seeks to let data define urban housing market segments, replacing the conventional administrative or any pre-defined boundaries used in the previous housing submarket literature. We model housing transaction data using a conventional hedonic function. The hedonic residuals are used to estimate an isotropic semi-variogram, from which residual variance–covariance matrix is constructed. The correlations between hedonic residuals are used as identifier to assign housing units into clusters. Standard submarket identification tests are applied to each cluster to examine the segmentation of housing market. The results are compared with the prevailing structure of market segments. Weighted mean square test shows that the defined submarket structure can improve the precision of price prediction by 17.5%. This paper is experimental in the sense that it represents one of the first attempts at investigating market segmentation through house price spatial autocorrelations. Copyright Springer Science+Business Media, LLC 2007

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File URL: http://hdl.handle.net/10.1007/s11146-007-9015-0
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Article provided by Springer in its journal The Journal of Real Estate Finance and Economics.

Volume (Year): 34 (2007)
Issue (Month): 3 (April)
Pages: 385-406

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Handle: RePEc:kap:jrefec:v:34:y:2007:i:3:p:385-406
Contact details of provider: Web page: http://www.springerlink.com/link.asp?id=102945

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  1. Lapham, Victoria, 1971. "Do Blacks Pay More for Housing?," Journal of Political Economy, University of Chicago Press, vol. 79(6), pages 1244-57, Nov.-Dec..
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  12. John F. Kain & John M. Quigley, 1975. "Housing Markets and Racial Discrimination: A Microeconomic Analysis," NBER Books, National Bureau of Economic Research, Inc, number kain75-1.
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  14. Straszheim, Mahlon R, 1974. "Housing Market Discrimination and Black Housing Consumption," The Quarterly Journal of Economics, MIT Press, vol. 88(1), pages 19-43, February.
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  17. Dale-Johnson, David, 1982. "An alternative approach to housing market segmentation using hedonic price data," Journal of Urban Economics, Elsevier, vol. 11(3), pages 311-332, May.
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